Barclays reports 17% profit rise on strong equities trading
Barclays Surpasses Expectations with Robust First-Half Performance
By Lawrence White
LONDON, July 28 (Reuters) - Barclays on Tuesday reported a first-half profit rise of 17%, beating analysts' forecasts, as it followed Wall Street peers in reaping bumper equities trading revenues and deal fees this year.
Profit and Revenue Highlights
The British bank reported profit before tax for the January to June period of £6.1 billion on Tuesday, just above analysts' expectations of about £5.94 billion.
It also announced a fresh share buyback of £1 billion, above forecasts for £831 million, and dividends worth £800 million as it returns excess capital to shareholders.
Upgraded Guidance and Performance Goals
Barclays slightly upgraded its income guidance for the year from £31 billion to £31.5 billion and said it was on track to meet its performance goals for 2026, in the latest sign that British lenders' are sustaining a recent run of robust profits even amid falling interest rates and an uncertain economic backdrop.
Investment Banking and Equities Trading
Barclays' investment bank, which has remained one of the group's main earnings engines and a differentiator from domestic-focused UK rivals such as Lloyds and NatWest, delivered total income of £4 billion in the second quarter of the year compared with analysts' forecasts for £3.7 billion.
Equities Revenue Growth
The British bank reported revenues from equities rose 45% in the quarter compared with the same period last year. That lagged those of Wall Street rivals which were up an average 69% in equities for the period, aided by the huge SpaceX initial public offering that helped supercharge earnings.
Market Volatility and Deal Activity
Volatility in financial markets triggered by the Iran war has driven a trading frenzy that has boosted banks' revenues, while blockbuster M&A deals and IPOs have fuelled investment banking fees.
Barclays' Recent Performance and Market Position
Barclays, like many European banks, has seen its profits climb sharply in recent years, boosted by higher rates, a benign backdrop for lending and demand for services from its corporate customers. Shares in the London-based bank are up close to 50% in the past year, trading at levels last seen at the height of the 2007-2008 global financial crisis.
Banks Brace for Policy Changes Under New Leadership
Sector Outlook Amid Political Shifts
BANKS BRACE FOR LATEST LEADER'S POLICIES
Barclays is the first big British bank to report earnings this week, as the country's lenders warily eye newly installed Prime Minister Andy Burnham, the country's seventh leader in the last ten years.
Taxation and Regulatory Concerns
Having reaped record profits in recent years, lenders have been concerned the left-leaning Burnham might hike taxes on the sector.
Banks however received a boost on Friday when Reuters reported the Burnham administration is likely to preserve the previous administration's pro-growth approach to financial services.
Investor Focus and Economic Backdrop
Investor attention will now shift to how resilient lending margins will remain in the face of the Bank of England's rate-cutting cycle, as well as credit quality concerns amid a weak economic backdrop.
(Reporting by Lawrence White; Editing by Tommy Reggiori Wilkes)
