Deal Fees Lift Revenue At Barclays -- WSJ
October 26 2019 - 3:02AM
Dow Jones News
By Margot Patrick
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 26, 2019).
Barclays PLC posted record revenue in its investment bank in the
third quarter but warned that its U.K. business is feeling effects
from Britain's planned departure from the European Union.
Chief Executive Jes Staley said the third quarter was its best
ever for advisory and underwriting, amid a surge in stock and bond
deals. He said fees spiked 24% from a year ago as the bank worked
on deals for companies such as Occidental Petroleum Corp. and
Germany's TeamViewer GmbH.
That helped lift revenue across Barclays' broader corporate and
investment bank by 17% in the third quarter, to GBP2.62 billion
($3.36).
Activist investor Sherborne Investors has been waging a campaign
to have Barclays scale back in investment banking. In response,
Barclays has defended its mix of businesses, saying it aims to be
resilient to market conditions by having a large U.K. retail and
business bank, a New York- and London-based corporate and
investment bank and U.S. credit cards. Mr. Staley on Friday said
the model is working, and "allows us to weather today's macro
headwinds."
In the U.K. business, he said, Brexit has dented confidence.
Consumers and companies are holding on to cash instead of spending,
Mr. Staley said, and companies are holding off on strategic
decisions such as acquisitions. "There is clearly an economic
impact from the uncertainty around Brexit," he said.
Barclays shares rose 1.7% in European trading Friday while other
bank stocks were down in part because of worries over further
Brexit wrangling in the U.K.
The bank overall posted a GBP292 million net loss in the third
quarter, down from a GBP1.05 billion net profit last year, mainly
because of a GBP1.4 billion charge to reimburse customers for
payment protection insurance. Barclays and other U.K. banks are
nearing the end of a yearslong program to reimburse customers who
were wrongfully sold insurance on bank products, at a cost of
around GBP50 billion across the sector.
Revenue across the group was GBP5.54 billion, up 8% on third
quarter 2018.
After stripping out the PPI charge and other litigation costs,
Barclays' net profit for the quarter was GBP1.23 billion, up from
GBP1.14 billion in third quarter 2018.
Mr. Staley said Barclays is on track to meet a 9% target this
year for returns on tangible equity, a closely watched measure. He
said the bank continues to target a 10% ROTE for next year but has
to be "realistic."
"We are highlighting the reality that interest rates are much
lower and the uncertainty of Brexit continues," Mr. Staley
said.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
October 26, 2019 02:47 ET (06:47 GMT)
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