Barclays reported second-quarter net profit slightly lower than a year ago, at £1.2 billion, with net interest income falling in its core U.K. units. The bank’s revenue for the quarter stood at £6.3 billion, surpassing expectations, and it also announced a share buyback program of up to £750 million. While net interest income at the consumer bank dropped 4%, income at the investment bank saw a 10% increase to £3.02 billion. Analysts believe that Barclays’ investment banking revenue outperformed expectations and could support the bank’s mid-term targets, with a focus on regrowing market share in the U.S.
Barclays raised its full-year net interest income target for the group and credit impairment charges remained steady year-on-year at £400 million. The bank’s common equity tier one capital ratio stood at 13.6%, down from 13.8% in December 2023. Barclays’ major restructure, initiated this year to improve efficiencies and boost profits, has shown progress with a return on tangible equity of 11.1% meeting its target for the year. The bank completed the sale of its performing Italian mortgage book, announced the sale of the German consumer finance business, and is on track to complete the acquisition of Tesco Bank in November 2024.
Barclays’ performance in the second quarter showed mixed results across its various units. While net interest income in the consumer bank and corporate bank saw declines, the investment bank recorded a significant increase in income. The bank’s restructure split its corporate and investment bank into separate entities, with the focus on enhancing efficiencies and profitability. Barclays’ strong investment banking revenue has provided a positive outlook for its mid-term targets, with expectations of regaining market share in the U.S. as a key area of focus moving forward.
The bank’s full-year net interest income target has been revised upwards, and credit impairment charges remained stable compared to the previous year. Barclays’ common equity tier one capital ratio, a measure of financial strength, slightly decreased. The progress of the three-year restructure plan, which aims to drive efficiencies and profits, has been evident with a return to profit in the first quarter despite a decline in revenue. The completion of various sales and acquisitions as part of the restructure plan is expected to further bolster Barclays’ financial performance in the coming quarters.
Barclays’ share price has risen significantly this year, reflecting investor confidence in the bank’s restructure and efficiency improvement plans. The bank’s strong performance in investment banking revenue in the second quarter has been a key driver behind this positive sentiment. Analysts believe that Barclays’ investment banking revenue could continue to support its mid-term targets, with a strategic focus on regaining market share in the U.S. Barclays’ progress in its restructure plan, with the completion of various sales and acquisitions, is expected to contribute to its financial performance in the long term. The bank aims to enhance efficiencies and boost profits through its three-year restructure plan, which has shown promising results so far.
