Barclays’ first-quarter earnings return to profit amid revision

LONDON – Barclays shares rose 4% on Thursday after the bank reported first-quarter net profit attributable to shareholders of £1.55 billion ($1.93 billion). It exceeded expectations and returned the British lender to profits amid a major strategic review.

Analysts polled by Reuters had expected a net profit attributable to shareholders of £1.29 billion for the quarter, according to LSEG data.

The bank’s shares were up 4.1% at 9:50 a.m. London time.

However, pre-tax profits fell 12% to £2.28bn from $2.6bn a year earlier as the bank braces to implement its extensive revamp plans.

Here are some other highlights:

• Group turnover in the first quarter was £6.95 billion, down 4% on the same period last year.
• Credit loss charges were £513 million, compared to £524 million in the first quarter of 2023.
• The Common Equity Tier 1 capital ratio (CET1), a measure of the bank’s financial strength, stood at 13.5%, compared to 13.8% in the previous quarter.
• Return on tangible equity (RoTE) for the full year was 12.3%.
• Total quarterly operating costs rose 2% year-on-year to £4.2 billion.

Barclays reported a net loss of £111m in the fourth quarter of 2023 due to an operational shake-up aimed at cutting costs and improving efficiency.

CEO CS Venkatakrishnan said the bank’s first quarter results showed it was committed to delivering on its turnaround plans, including through further investment in its UK consumer business and through its takeover of Tescobankwhich is expected to be completed in the fourth quarter of this year.

“We are focused on disciplined execution of the plan we presented during our Investor Update on February 20,” he said in a statement.

The renewal plans include a £900 million hit from structural cost-saving measures, which the bank said was expected to deliver gross cost savings of around £500 million by 2024, with an expected payback period of less than two years.

The reorganization saw the company reorganized into five operating divisions, separating corporate and investment banking: Barclays UK, Barclays UK Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank and Barclays US Consumer Bank.

The bank also pledged to return £10 billion to shareholders between 2024 and 2026 through dividends and share buybacks.

Will Howlett, financial analyst at Quilter Cheviot, said in a note on Thursday that first-quarter results were a “promising start”, indicating the bank is sticking to the financial roadmap set out in its 2023 annual results.

“With a solid start to the year, Barclays is ready to reshape its valuation story and deliver on its promises to shareholders,” Howlett said.

“The repetition of the profitability targets, targeting a return on tangible equity (RoTE) of over 10% by 2024 and over 12% by 2026, reflects the consistency in Barclays’ ambitions, despite previous setbacks.”

– CNBC’s Elliot Smith contributed to this report.