ii view: Glass is half-full at Barclays
Barclays benefits from diversity, but the outlook for next year is more challenging.
25th October 2019 15:31
by Keith Bowman from interactive investor
Barclays benefits from diversity, but the outlook for next year is more challenging.
Results for the nine months to 30 September 2019
- Total income up 2% to £16.3 billion
- Pre-tax profit up 4% to £3.26 billion
- Payment Protection Insurance (PPI) of £1.4 billion
Chief executive James Staley said:
"These represent another set of consistent and resilient results, and they show the benefits of our diversified model - one which allows us to weather today's macro headwinds and grow our businesses and profitability over time.
"As we continue to invest in our digital capabilities across the bank, management's focus on cost control remains a priority. we acknowledge that the outlook for next year is unquestionably more challenging now than it appeared a year ago, in particular given the uncertainty around the UK economy and the interest rate environment."
ii round-up:
Barclays (LSE:BARC) operates via two main divisions: Barclays UK and Barclays International.
Barclays UK includes the personal banking, Barclaycard, and wealth, entrepreneur, and business banking. Barclays International includes the corporate and investment banking and consumer, cards, and payments segments in Europe and the US.
For a round-up of these nine-month results, please click here.
ii view:
Like rivals, Barclays has looked to become a simpler, more focused bank since the financial crisis. Unlike rivals, management has remained stubborn in refusing to part with its markets/investment banking operations. The business reported a 4% jump in profit year-to-date. Its withdrawal from overseas has also been far more selective.
For investors, Brexit and how it impacts the bank and its customers hogs the near-term outlook. More favourably, shareholder returns and a prospective dividend yield of around 5% are attractive.
Positives
- Diversity of business and geographical location
- Markets/investment bank may win business from the closure of operations at Deutsche Bank
- Barclays passed the Bank of England stress test back in 2018
Negatives
- Credit impairment charges increased to £1.39 billion, up from £825 million
- More challenging outlook
- Barclays UK net interest income fell 2%
The average rating of stock market analysts:
Buy
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