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Barclays – Barc-ing Up The Right Tree

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Barclays PLC (LON:BARC)’s total income rose 5.0% to £5.5bn in the third quarter, driven by non-interest income, which was up 11.9% to £3.5bn. Net interest income fell 5.6% to £1.9bn, as Barclays had lower unsecured loan balances.

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Q3 2021 hedge fund letters, conferences and more

Pre tax profit rose to £2.0bn, up from £1.1bn, as credit impairment charges continued to fall. James Staley, CEO, said the group’s “seeing evidence of a consumer recovery and the early signs of a more favourable rate environment”.

The shares were unmoved following the announcement.

Barclays’ Diversified Business Model

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown:

“Barclays’ diversified business model is still paying dividends. The group has an extra income stream in the form of fees and commission from its investment bank – an area of business which has seen its best ever Q3 performance, offsetting more challenging conditions elsewhere.

Eyes are also on the more traditional banking business, where credit card balances are still lacklustre, reflecting the uncertain economic outlook. When times are tough, you’re a lot less likely to max out your credit card, and those that can, pay down their balances faster. The bright spot came in the form of management’s commentary, which suggested more lucrative consumer habits are being noticed. We could see some of that translate into the numbers at the full year, but a lot will depend on how customers react to ongoing news of increasing Covid cases and potential new lockdowns.

Barclays also hinted at a more favourable rate environment, which could suggest interest rate increases are on the horizon. Dramatic hikes are probably less likely, but any increase helps boost the profitability of banks’ loans.”

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