Barclays (BCS) Earnings and Revenues Increase Y/Y in Q3

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BarclaysBCS reported third-quarter 2018 net income attributable to ordinary equity holders of £1 billion ($1.30 billion). This reflects improvement from net income attributable to ordinary equity holders of £583 million ($792.6 million) recorded in the prior-year quarter.

Results were driven by improvement in trading activities and decline in credit impairment charges. Further, the bank's balance sheet position remained strong. However, fall in net interest income and higher expenses acted as headwinds.

Revenues Improve, Costs Rise

Net operating income was £4.88 billion ($6.36 billion), up 9% year over year. The increase reflects growth in net fee, commission and other income.

Operating expenses (excluding U.K. bank levy, and litigation and conduct) totaled £3.33 billion ($4.34 billion), increasing 2% from the year-ago quarter.

Cost to income ratio was 67%, up from 65% in the prior-year quarter.

Credit impairment charges plunged 64% from the prior-year quarter to £254 million ($330.9 million).

Pre-tax income was £1.46 billion ($1.90 billion), up from £1.11 billion ($1.51 billion) in the year-ago quarter.

Segmental Performance

Barclays U.K .: Profit before tax was £740 million ($964.1 million), marking an improvement from £661 million ($898.6 million) in the year-ago quarter. Rise in net operating income, partly offset by higher operating expenses, was the primary driver for the segment's performance.

Barclays International : Profit before tax was £850 million ($1.11 billion), up 30% from the prior-year quarter. The rise was mainly driven by improved performance in consumer, cards and payments division.

Head Office : Loss before tax was £129 million ($168.1 million), improving from loss of £206 million ($280.1 million) in the prior-year period.

Strong Balance Sheet and Capital Ratios

Total assets as of Sep 30, 2018, were £1,170.8 billion ($1,526.5 billion), up nearly 2% sequentially.

As of Sep 30, 2018, Common Equity Tier 1 ratio was 13.2%, up from 13.0% on Jun 30, 2018.

Total risk-weighted assets were £316.2 billion ($412.26 billion) as of Sep 30, 2018.


The company targets to achieve return on tangible equity of greater than 9% in 2019 and more than 10% in 2020.

Operating expenses (excluding litigation and conduct charges) for 2018 are expected to be £13.9 billion. Further, management remains on track to achieve operating expenses in the range of £13.6-£13.9 billion in 2019.

Barclays expects loan impairment for second half 2018 to be higher than first half.

The company intends to pay out a dividend of 6.5 pence per share (subject to regulatory approvals) in 2018.

Our View

Barclays continues to face pressure on revenues due to low interest rates across the globe. Nonetheless, its efforts to restructure and simplify its operations by divesting non-core businesses are commendable.

Barclays PLC Price, Consensus and EPS Surprise

Barclays PLC Price, Consensus and EPS Surprise | Barclays PLC Quote

Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Other Foreign Banks

Deutsche Bank AG DB reported net income of €229 million ($267.4 million) in third-quarter 2018, which tanked 64.7% from the year-ago quarter. Income before income taxes plunged 45.8% year over year to €506 million ($590.9 million).

ItauUnibanco Holding S.A. ITUB and HSBC Holdings HSBC are expected to announce results on Oct 29.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: BCS , ITUB , DB , HSBC

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