Markets

Barclays Beats Profit Estimates and Ups Shareholder Payments as Equities, Investment Banking Surge

Matthew Childs | Reuters
  • The British lender posted a quarterly attributable profit of £2.1 billion ($2.9 billion), up from £90 million for the second quarter of 2020.
  • Barclays also announced increased capital distributions to shareholders, with a half-year dividend of 2 pence per share and a further share buyback of up to £500 million.

LONDON — Barclays beat second-quarter profit expectations on Wednesday and boosted returns to shareholders, with its investment banking and equities businesses posting record incomes.

The British lender posted a quarterly attributable profit of £2.1 billion ($2.9 billion), up from £90 million for the second quarter of 2020. Analysts had expected net reported income of £1.7 billion for the three months until the end of June, according to Refinitiv data.

Equities and investment banking fees were up 38% and 27%, respectively, in the second quarter.

Barclays also announced increased capital distributions to shareholders, with a half-year dividend of 2 pence per share and a further share buyback of up to £500 million.

The bank has also seen a significant reduction in credit loss provisions, as outlined in its first-quarter earnings report, and managed to release nearly £800 million from its credit impairment provisions as opposed to the £1.6 billion charge incurred for the same period of 2020.

"Our profitability, strong capital position and balance sheet have enabled us to increase capital distributions to shareholders," CEO Jes Staley said in a statement, adding that the bank is seeing a resurgence in activity across its businesses.

"Our CIB (corporate and investment banking) business is well-positioned to benefit from continued growth in debt and equity capital markets, with Global Markets and Investment Banking fees income up 36% since 2019, and our strong retail businesses are poised to support and benefit from a consumer recovery."

Barclays shares gained 4.7% in early trade.

Other highlights for the quarter:

  • Group revenues hit £5.4 billion, fractionally up from £5.34 billion a year ago.
  • CET 1 ratio, a measure of bank solvency, came in at 15.1%, up from 14.2% a year ago.

The fixed income, currencies and commodities (FICC) trading business was down 37% across the first half of the year compared to a bumper first half of 2020, as coronavirus-induced market volatility drove a spike in trading volumes.

Barclays has previously indicated that it expects costs to rise in 2021 compared to the previous year, due to coronavirus-related expenses, a real estate review, further structural cost action and pay increases.

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