Shares of Barclays gapped up Wednesday after the British banking giant beat third-quarter earnings expectations, gave a positive outlook and announced a share buyback.
The UK-based bank reported late Tuesday that revenue increased 11% to 7.2 billion British pounds (or about $9.6 billion) year over year. Earnings in U.S. currency were 56 cents a share, a fractional increase from a year ago, according to FactSet. Analysts had expected earnings of 54 cents a share on $9.432 billion in revenue.
Third-quarter return on tangible equity (ROTE) per share increased 10.6% and 12.3% year to date. The bank raised its 2025 ROTE guidance to more than 11% and reaffirmed its 2026 target for above 12%.
"This is driven by a stronger outlook for stable income and an earlier than planned delivery of efficiency savings," CEO C. S. Venkatakrishnan said in the earnings release. "Moreover, it comes despite an additional charge for motor finance redress."
That charge — 235 million pounds in the latest report — comes after the collapse of subprime auto lender Tricolor Holdings. The U.S.-based company specialized in serving Latino auto buyers, including many without a credit history or Social Security number. The company filed for a bankruptcy liquidation amid government investigations and accusations of fraud by a bank partner.
Tricolor teamed up with JPMorgan Chase, Barclays and other banks to package loans into asset-backed securitized products for resale to investors. The charge dented Barclays' Q3 Common Equity Tier 1 capital ratio, a measure of financial strength, by about five basis points.
Barclays, citing a stronger outlook for stable income, said it expects net interest income this year to exceed 12.6 billion pounds, due to UK lending momentum, deposit stability and operational progress in the firm's U.S. consumer banking.
The bank also announced a 500 million pound share buyback, which Barclays credited to strong capital generation and other factors. The buyback will start as soon as the current one is completed.
Barclays Stock Gaps Above 50-Day Line
BCS stock jumped 5.4% Wednesday intraday to 20.55, gapping back above its 50-day moving average. The move came in heavy trading and offers an early entry into the bank's U.S.-traded shares. The stock also appears to be forming a flat base, with a potential 21.22 buy point after this week.
Barclays has an IBD Composite Rating of 93. Its EPS Rating of 95 is one of the highest in the money-center banking industry group, according to IBD MarketSurge.
Barclays stock has a 21-day average true range (ATR) of 1.93%. The average true range, available on IBD MarketSurge, gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq still in a power trend, investors can buy stocks with ATRs up to 8%, though they should not be too concentrated in such stocks.
