ii view: can Barclays stand out from rival banks?

Exposure to the US and investment banking with a forecast dividend yield of over 4%. Buy, sell, or hold?

Third-quarter results to 30 September

• Revenue up 9% to £5.95 billion
• Pre-tax profit up 6% to £1.97 billion
• Capital cushion or CET1 ratio of 13.8%, up from 13.6% in Q2

Chief executive Mr Venkatakrishnan said:

"We delivered another quarter of strong returns and achieved income growth in each of our three businesses. Our performance in FICC (Fixed Income, Currency, Commodities) was particularly strong and we continued to build momentum in our consumer businesses in the UK and US.”

• Read about how to: Open a Trading Account | How to start Trading Stocks | Top UK shares

ii round-up:

Barclays (LSE:BARC) operates across the three businesses of UK retail and commercial banking, UK and overseas credit card lending, and global investment banking.

Geographically, the UK generates its biggest slice of revenues at just over half. The Americas comes in next at around a third, with Europe, Asia, and the Middle East the balance.  

For a round-up of these latest results announced on 26 October, please click here.

ii view:

Tracing its roots back to 1690, Barclays today employs over 80,000 people and is a constituent of the FTSE 100 index. Like its rivals, Barclays has, since the 2008 financial crisis, been on a mission to become a simpler more focused bank. Unlike its rivals, Barclays has kept much of its markets and investment banking operations, including those parts purchased following the collapse of Lehman Brothers in 2008. Barclays’s structure today is more like JPMorgan Chase & Co (NYSE:JPM) in the US than its UK rivals. 

• UK GDP data flashes recession warning
• Bank issues recession warning after biggest interest rate rise since 1989

For investors, the highly uncertain economic outlook for its customers has seen bad debt provisions made. Governance concerns have been placed back under the spotlight given a trading error that saw it agree a penalty of $361 million with US regulators, while potential for governments to impose windfall taxes or simply increase existing taxes now warrants consideration. So does climate change and responsibility as to who banks lend to and why.   

More favourably, its diverse business model, including investment banking which many of its UK rivals exited posted the financial crisis, is now reaping rewards. A tight hold on costs is being made while shareholder returns remain in focus, with the estimated future dividend yield sat at over 4%. 

• Lloyds Bank: a strong quarter reflects strength and prudent planning
• Four American banks: buy, sell, hold?

On balance, and offering both diversity and further potential for sharpened efficiency, investors with a long-term perspective are likely to stay the distance. 

Positives

• Business diversification
• Focus on shareholder returns

Negatives

• Uncertain economic outlook
• Talk of increased taxes

The average rating of stock market analysts:

Buy