Barclays’ investment bankers brought in a record haul as the booming deals market extended through the second quarter, offsetting muted earnings in the trading unit and helping to lift the group’s performance.
Income from capital markets and merger advisory at the London-based lender rose by almost a fifth to £873 million, outperforming the average on Wall Street. This is the highest since Jes Staley took over as chief executive officer in late 2015, strengthening his hand as he tilts the group toward investment banking.
Revenues from trading, though, plunged as the rally in fixed-income markets that drove record profit a year ago petered out – a trend that caught out many US rivals but largely spared Deutsche Bank, which also announced earnings Wednesday.
Overall, Barclays’ results in the second quarter were ahead of forecasts. Shares in the bank rose more than 4 per cent in early trading.
The group’s domestic retail bank benefited from the economic rebound as Covid-19 restrictions are lifted. The bank released a net £797 million from last year’s provisions for loans that could turn sour during the pandemic, joining UK peers in unwinding several billions of pounds they booked in the early stages of the outbreak.
With the economic outlook improving, Barclays said it planned to buy back shares worth as much as £500 million. It also announced a 2 pence per share half-year dividend and said it is expected to represent, under normal circumstances, around one-third of total dividends for the year.
"Credit conditions remain pretty benign; we are not really seeing a pick up in delinquencies or any stress in the environment yet," Tushar Morzaria, finance director, said in a phone interview. "Our expectation is that we should see a pickup in default, but if we don't, then there could be further release far more soon."
One of Mr Staley’s key targets, return on tangible equity, soared in the quarter and Barclays said this measure was likely to be above its 10 per cent target during this year, after falling short during the pandemic.Barclays also announced a 321 million-pound charge as it cuts back on real estate. The lender said in June it was giving up its second office in London’s Canary Wharf financial district, moving traders and bankers into its main headquarters nearby. Morzaria said the bank was still reviewing its branch footprint. – Bloomberg
