BARCLAYS enjoyed a record third quarter at its investment banking arm as the UK lender more than held its own against Wall Street giants such as JPMorgan and Goldman Sachs. Chief executive Jes Staley has long fended off calls to ditch the investment bank, insisting that a diversified strategy would be best for shareholders. With 40% of revenues in dollars, Barclays is protected against Brexit turmoil and the pound’s weakness, unlike its peers Lloyds and Royal Bank of Scotland.
Staley said: “Those questions around the bank’s strategy have become a thing of the past. “The American firms are exceptionally good at what they do, but we have demonstrated that we can compete.” The investment bank pulled in fees of £688 million for advising on deals including the London Stock Exchange’s purchase of Refinitiv and Ovo Energy’s bid for SSE’s retail arm.
The strength in banking helped total revenues rise 8% to £5.5 billion, well ahead of City expectations. The shares rose 2% to 170p. Last night Barclays ditched a controversial plan to stop its customers from withdrawing cash at Post Offices after an outcry from MPs and the Daily Mail. Staley said the shift to digital banking meant few customers were angry, but admitted the bank may have misjudged the wider mood.
Profit before tax for the quarter fell 83% to £246 million due to a £1.4 billion provision for dealing with last-minute payment protection insurance claims. Staley said an “avalanche” of claims, most of them spurious, has kept 10,000 staff busy opening envelopes. The latest
set-aside takes Barclays’ total PPI bill to £11 billion. Ian Gordon at Investec said Barclays is now the “best of the bunch”, and the only UK banking stock worth buying. Nicholas Hyett at Hargreaves Lansdown said: “It’s just one quarter, but this is exactly the picture Jes Staley wants to paint. A resilient UK bank is cutting costs and keeping bad loans to a minimum, generating a reliable income stream. Meanwhile, the corporate and investment bank is putting the icing on the cake.”
Staley said there are signs of Brexit-related caution from personal and corporate clients, with cash balances rising. “M&A is fairly soft,” he said. “Strategic decisions at board level are restrained, so there is clearly an economic impact from the uncertainty around Brexit.
