Barclays profit gets boost from investment banking, following Wall Street’s lead

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Barclays headquarters in London, England.
Justin Solomon | CNBC

Barclays reported better-than-expected third-quarter profits on Thursday, following its Wall Street rivals in receiving a significant boost from its investment banking division.

The British bank reported attributable profit of £1.45 billion for the third quarter. Analysts had expected a net income of £931.25 million, according to Refinitiv data, and the figure marks a significant increase from the £611 million reported in the same period last year.

“While the CIB [Corporate and Investment Bank] performance continues to be an area of strength for the Group, we are also seeing evidence of a consumer recovery and the early signs of a more favourable rate environment,” CEO Jes Staley said in a statement.

Barclays’ corporate and investment banking division had its strongest year-to-date third-quarter performance in terms of fees and equities income, boosting the bank’s return on tangible equity — a key ratio used to assess profitability.

Income from investment banking fees increased 37% to £2.7 billion, “driven by a strong performance in Advisory and Equity capital markets reflecting an increase in the fee pool and an increased market share,” the bank said in its earnings release. Equities income climbed 28% to £2.47 billion on the back of “strong client activity in derivatives and increased client balances in financing.”

Other highlights:

  • Common equity tier one capital (CET1) ratio was 15.4%, compared to 14.6% at the end of the third quarter of 2020 and 15.1% in the previous quarter.
  • Group income hit £5.5 billion, up from £5.2 billion for the same period last year.
  • Return on tangible equity (RoTE) was 14.9%, compared to 3.6% in the third quarter of 2020.

Barclays’ Wall Street competitors Goldman Sachs, Wells Fargo, Citigroup, Bank of America, Morgan Stanley and JPMorgan have all topped earnings expectations this quarter on the back of investment banking strength over the past week.

The British lender also released £622 million from its loan loss provisions for the quarter. This compared to a £608 million charge booked at the end of the third quarter of 2020.

This is a breaking news story and will be updated shortly.

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