Barclays – Barc-ing Up The Right Tree

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Barclays – Barc-ing Up The Right Tree
PIRO4D / Pixabay

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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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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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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