Barclays profit dips in the second quarter, beats estimates

LONDON — Barclays on Thursday reported second-quarter net profit attributable to shareholders of £1.2 billion ($1.54 billion), slightly lower than a year ago, as the lender’s net interest income in its core U.K. units fell.

Analysts polled by Reuters had expected attributable net profit of £1.03 billion for the period, according to LSEG data, in a decline from the £1.3 billion logged in the second quarter of 2023.

Shares were 2% higher at 8:09 a.m. London time.

Barclays posted revenue of £6.3 billion for the latest quarter, above a forecast of £6.25 billion. It also announced a share buyback program of up to £750 million.

Net interest income at Barclays’ consumer bank dropped 4% year-on-year to £3.15 billion across the January-June period, as its net interest margin declined from 3.2% to 3.15%. Income at the Barclays corporate bank fell 6%, as lower liquidity pool income offset the higher interest rate environment.

Performance was stronger at its investment bank, where income jumped 10% to £3.02 billion in the second quarter.

Max Georgiou, analyst at research firm Third Bridge, said that the Barclays investment banking revenue had outperformed expectations, providing a positive for the bank’s mid-term targets.

“To continue executing this strategy we expect to see a continued focus on regrowing share in the U.S. market,” Georgiou said.

On Thursday, Barclays also raised its full-year net interest income target for the group — excluding the head office and investment bank divisions — to circa £11 billion, from £10.7 billion previously.

Other highlights from the results included:

• Credit impairment charges were steady year-on-year in the second quarter at £400 million.
• Common equity tier one (CET1) capital ratio, a measure of bank’s financial strength, was 13.6%, down from 13.8% in December 2023.

The British lender this year kicked off a major restructure aiming to improve efficiencies and boost profits, driving its share price 52% higher in the year to date.

Launching that program resulted in a net loss of £111 million in the fourth quarter of 2023, but the bank returned to profit in the first quarter despite a decline in year-on-year revenue.

Group Chief Executive C. S. Venkatakrishnan said Thursday the three-year plan was making “good progress,” with return on tangible equity of 11.1% across January-June meeting its target of above 10% for the year.

“We completed the sale of the performing Italian mortgage book, announced the sale of the German consumer finance business, and are on track to complete the acquisition of Tesco Bank in November 2024,” Venkatakrishnan said.

The lender’s restructure split the corporate and investment bank across Barclays U.K., Barclays U.K. Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank and Barclays U.S. Consumer Bank.