As per latest press release by Barclays Plc., it reports a revenue and investment plunge with less-than-expected scale. The firm also confirmed to have avoided any sort of new misconduct charges to aid investors overlooking a larger loss – coming up due to unwanted assets buy-out.
WEDNESDAY: In accord with claims laid forward by London-based bank, *Pretax profit fell 25% from 1.06 billion pounds to 793 million pounds, from a year ago. In terms of revenue estimate, a plunge was yielded worth 13% to 4.6 billion pounds – beating the 4.48 billion-pound prediction laid forward by the company itself.
(*underlying pretax profit at the corporate and investment bank was 701 million pounds, a 31 percent drop, excluding some one-time charges for legal and regulatory matters)
During three months’ time duration, the shares hiked at peak when investment bank posted minor revenue decline in comparison to its U.S. competitors. Moreover ‘significant’ market share gains boosted up CEO Jes Staley’s morale, who earlier was hesitant to spin off the unit.
“The market is likely to take comfort from the income beat, given that this has been a historical source of disappointment for the group and considering concerns around weakness in investment banking performance coming into the results,” Shore Capital’s **analyst, Gary Greenwood
(**who gave a ‘buy’ rating to Barclays shares)
Exclusive data obtained from Bloomberg revealed firm’s shares on bull track by 2.5% gain at 178.25 pence at 8:56 am in London – the highest price since 02 February 2016.
There had been a 4% decline in revenue, as a jump in credit trading offset declines in equity- and macro-trading units.
On a related note, investment banking fees plunged worth 12% resulting into a decline in April’s income.
Not to mention, Barclays had warned that1Q would feature lower revenue from the investment bank after a weak performance the last month.
“Good performance in a challenging environment.” a ***comment by JPMorgan Chase & Co. analyst, Raul Sinha.
(***Profit and revenue yieldedbullish estimates to what he had forecasted)
The results will bolster Staley’s chances of convincing investors of the long-term benefits of maintaining an investment bank, even after it generated lower returns than Barclays’s consumer and credit-card businesses (source: Bloomberg).
Cutting off Assets
Barclays is looking to cut risk-weighted assets at the bad bank, led by John Mahon and Harry Harrison, to about 20 billion pounds by 2017.
“The performance of the core today shows the potential power of the group once it is freed from the drag of non-core. As these deals complete, we are reducing risk-weighted assets and, crucially, eliminating costs which have a direct impact on our profitability today and mask the true performance of our strong core business.”– Stanley
The stock has been reported to drop down by 21% in year 2016 causing the bank to trade at utmost half the book value of its assets.
INSIGHT: Last year in July, Chairman John McFarlane had pledged to double the share price over the next three to four years.
UPDATE: As per anonymous sources, the bank is selling down its 62% stake in Barclays Africa Group Ltd. to raise capital and is further looking on to sell an initial 10% stake in its African unit to several large investors, while keeping the option to divest its entire holding.