Advertisement
Singapore markets closed
  • Straits Times Index

    3,224.01
    -27.70 (-0.85%)
     
  • Nikkei

    40,168.07
    -594.66 (-1.46%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Bitcoin USD

    70,860.34
    +2,340.41 (+3.42%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,259.46
    +10.97 (+0.21%)
     
  • Dow

    39,829.43
    +69.35 (+0.17%)
     
  • Nasdaq

    16,392.74
    -6.78 (-0.04%)
     
  • Gold

    2,239.40
    +26.70 (+1.21%)
     
  • Crude Oil

    83.07
    +1.72 (+2.11%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • FTSE Bursa Malaysia

    1,530.60
    -7.82 (-0.51%)
     
  • Jakarta Composite Index

    7,288.81
    -21.28 (-0.29%)
     
  • PSE Index

    6,903.53
    +5.36 (+0.08%)
     

Barclays (BCS) Gains as Q1 Earnings & Revenues Improve Y/Y

Shares of Barclays BCS gained 7.4% following the release of its first-quarter 2023 results. The company reported net income attributable to ordinary equity holders of £1.78 billion ($2.16 billion), up 27% from the prior-year quarter.

Barclays’ results benefitted from an improvement in revenues. However, higher expenses hurt the results to some extent. Also, the company recorded a substantial year-over-year rise in credit impairment charges.

Revenues Improve, Expenses Rise

Total income was £7.24 billion ($8.79 billion), up 11.4% year over year.

Operating expenses (excluding litigation and conduct costs) totaled £4.11 billion ($4.99 billion), up 14.6% year over year.

The cost-to-income ratio was 57%, down from 63% a year ago.

In the reported quarter, Barclays recorded credit impairment charges of £524 million ($636.5 million), up significantly from the year-ago quarter.

Pre-tax income was £2.60 billion ($3.16 billion), up 16.3% year over year.

Segmental Performance Good

Barclays UK: Profit before tax was £754 million ($915.9 million), up 26.9% from the year-ago quarter. The rise was driven by higher total income.

Barclays International: Profit before tax was £1.93 billion ($2.34 billion), up 12.6% year over year. The rise was driven by the robust performance of the consumer, cards and payments division.

Head Office: Loss before tax was £84 million ($102 million), broader than the loss incurred in the prior-year quarter.

Balance Sheet & Capital Ratios Strong

Total assets as of Mar 31, 2023, were £1,539.1 billion ($1,903.4 billion), up 1.7% from the prior quarter end.

Total risk-weighted assets increased marginally from the prior quarter to £338.4 billion ($418.5 billion) as of Mar 31, 2023.

As of Mar 31, 2023, the Common Equity Tier 1 (CET1) ratio was 13.6%, down from 13.8% as of Mar 31, 2022.

2023 Guidance

Management expects the loan loss rate to be 50-60 basis points.

Over the medium term, the CET1 ratio is expected to be 13-14%.

Barclays expects to deliver a return on tangible equity of more than 10% and a cost-to-income ratio of low 60%.

Our View

Given Barclays’ restructuring and business-simplification efforts, its operating efficiency is expected to improve in the quarters ahead. The company completed the acquisition of specialist residential mortgage lender — Kensington Mortgage Company Limited, which will strengthen its “product offering and capabilities in the UK mortgage market,” boost market share and capitalize on its low-cost funding base.

Barclays PLC Price, Consensus and EPS Surprise

 

Barclays PLC Price, Consensus and EPS Surprise
Barclays PLC Price, Consensus and EPS Surprise

Barclays PLC price-consensus-eps-surprise-chart | Barclays PLC Quote

ADVERTISEMENT

Currently, Barclays carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Foreign Banks

UBS Group AG UBS reported first-quarter 2023 net profit attributable to shareholders of $1.03 billion, down 51.8% from the prior-year quarter.

UBS’ quarterly performance was worrisome, as there were increases in expenses. Lower revenues acted as another major headwind.

Nevertheless, the performance of the Personal & Corporate Banking division was impressive. UBS’ Asset Management arm, Group Functions, The Investment Bank and Global Wealth Management segments did not perform well.

ICICI Bank IBN released fourth-quarter fiscal 2023 (ended Mar 31) results. Net income was INR91.22 billion ($1.1 billion), up 30% from the prior-year quarter.

IBN’s results were driven by a rise in net interest income and non-interest income, higher rates, and growth in loans and deposits. However, provisions increased in the quarter. Also, higher operating expenses posed as the undermining factor for IBN.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Barclays PLC (BCS) : Free Stock Analysis Report

UBS Group AG (UBS) : Free Stock Analysis Report

ICICI Bank Limited (IBN) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research