Yahoo Finance Barclays (BCS) Q1 Earnings, Revenues & Expenses Decline Y/Y
Barclays BCS reported first-quarter 2024 net income attributable to ordinary equity holders of £1.55 billion ($1.97 billion), down 13% year over year.
The company recorded lower revenues in the quarter, which was a negative. However, a decline in operating expenses, along with lower credit impairment charges, aided the results to some extent.
Revenues & Expenses Decline
Total income was £6.95 billion ($8.81 billion), down 4% year over year.
Operating expenses (excluding litigation and conduct costs, and charges related to the U.K. regulatory levies) totaled £4 billion ($5.07 billion), down 3% year over year.
The cost-to-income ratio was 60%, up from 57% a year ago.
In the reported quarter, Barclays recorded credit impairment charges of £513 million ($650.5 million), down 2% year over year.
Pre-tax income was £2.28 billion ($2.89 billion), down 12% year over year.
Quarterly Segment Performance
Barclays UK: Profit before tax was £705 million ($894 million), down 6% from the year-ago quarter. The fall was due to lower total income.
Barclays UK Corporate Bank: Profit before tax was £168 million ($213 million), down 27% year over year. The decline was mainly due to a fall in total income and a rise in total operating expenses.
Barclays Private Bank and Wealth Management: Profit before tax was £95 million ($120.5 million), down 15% year over year. The decline was mainly due to a rise in total operating expenses.
Barclays Investment Bank: Profit before tax was £1.34 billion ($1.70 billion), down 12% year over year. The decline was mainly due to a fall in total income.
Barclays US Consumer Bank: Profit before tax was £59 million ($74.8 million), down 24% year over year. The decline was mainly due to a rise in credit impairment charges.
Head Office: The loss before tax was £89 million ($112.9 million), unchanged from the prior-year quarter.
Balance Sheet Solid
Total assets as of Mar 31, 2024, were £1,577.1 billion ($1,990 billion), up 7% from the end of December 2023.
Total risk-weighted assets increased 2% from the Dec 31, 2023, level to £349.6 billion ($441.1 billion) as of Mar 31, 2024.
As of Mar 31, 2024, the Common Equity Tier 1 (CET1) ratio was 13.5% compared with 13.6% as of Mar 31, 2023.
Guidance
Management expects the loan loss rate to be 50-60 basis points through the cycle.
Net interest income or NII (excluding Barclays Investment Bank and Head Office) is expected to be £10.7 billion in 2024. Of this, Barclays UK is projected to generate NII of £6.1 billion (excluding the impacts of the Tesco Bank acquisition, which is expected to generate an annualized NII of £400 million in the first year post-closure).
The company is targeting total income of £30 billion for 2026.
For 2024, the cost-to-income ratio is expected to be 63%. For 2026, operating expenses are likely to be £17 billion and the cost-to-income ratio is anticipated to be in the high-50s in percentage terms. This includes £1 billion of gross efficiency savings in 2024 and total gross efficiency savings of £2 billion by 2026.
In 2026, Barclays Investment Bank RWAs are expected to be 50% of the Group RWAs.
Over the medium term, the CET1 ratio is expected to be 13-14%.
Barclays expects to deliver a return on tangible equity of more than 10% or 10.5% (excluding inorganic activity) in 2024 and above 12% in 2026.
Additionally, BCS plans to return at least £10 billion of capital to shareholders between 2024 and 2026 through dividends and share buybacks, with a continued preference for buybacks.
Our View
Given Barclays’ restructuring and business-simplification efforts, its operating efficiency is expected to improve in the quarters ahead. The company’s cost-saving efforts will likely keep aiding financials. Yet, a challenging operating backdrop is expected to put pressure on revenue growth.
Barclays PLC Price, Consensus and EPS Surprise
Barclays PLC price-consensus-eps-surprise-chart | 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.
Competitive Landscape
We now look forward to the earnings releases of other foreign banks like HSBC Holdings plc HSBC and UBS Group AG UBS.
HSBC is expected to release quarterly results on Apr 30 and UBS is expected to release results on May 7.
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