Barclays beats profit estimates and ups shareholder payments as equities, investment banking surge
Barclays beat second-quarter profit expectations on Wednesday and boosted returns to shareholders, with its investment banking and equities businesses posting record incomes.
The British lender posted a quarterly attributable profit of £2.1 billion ($2.9 billion), up from £90 million for the second quarter of 2020. Analysts had expected net reported income of £1.7 billion for the three months until the end of June, according to Refinitiv data.
Equities and investment banking fees were up 38% and 27%, respectively, in the second quarter.
Barclays also announced increased capital distributions to shareholders, with a half-year dividend of 2 pence per share and a further share buyback of up to £500 million.
The bank has also seen a significant reduction in credit loss provisions, as outlined in its first-quarter earnings report, and managed to release nearly £800 million from its credit impairment provisions as opposed to the £1.6 billion charge incurred for the same period of 2020.
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“Our profitability, strong capital position and balance sheet have enabled us to increase capital distributions to shareholders,” CEO Jes Staley said in a statement, adding that the bank is seeing a resurgence in activity across its businesses.
“Our CIB (corporate and investment banking) business is well-positioned to benefit from continued growth in debt and equity capital markets, with Global Markets and Investment Banking fees income up 36% since 2019, and our strong retail businesses are poised to support and benefit from a consumer recovery.”
Barclays shares gained 4.7% in early trade.
Other highlights for the quarter:
- Group revenues hit £5.4 billion, fractionally up from £5.34 billion a year ago.
- CET 1 ratio, a measure of bank solvency, came in at 15.1%, up from 14.2% a year ago.
The fixed income, currencies and commodities (FICC) trading business was down 37% across the first half of the year compared to a bumper first half of 2020, as coronavirus-induced market volatility drove a spike in trading volumes.
Barclays has previously indicated that it expects costs to rise in 2021 compared to the previous year, due to coronavirus-related expenses, a real estate review, further structural cost action and pay increases.
