Third quarter (Q3) figures from Barclays (BARC) failed to capture the imagination of investors on Thursday despite record profits of £6.9 billion.
The better-than-expected results for the three months to 30 September 2021 also set new records for earnings and returns on tangible equity, yet some market watchers were left disappointed by the absence of news on the bank’s dividend policy and share buyback potential.
Others, however, pointed to the stock’s recent rally. The share price has run up 12.5% since late September, and nearly 24% since July, which may imply some profit taking today. The stock drifted around 1% lower to 197p. It’s better to travel than arrive, as some say.
INVESTMENT BANKING BOOM
Adjusted profit before tax of £1.99 billion surged beyond consensus forecasts of £1.64 billion, while earnings per share of 8.5p compared to a forecast of 6.2p.
The strong performance was predominately driven by a surge in its investment banking arm. Q3 profits here were £1.66 billion helping the nine-month figure to jump 49% to £4.84 billion.
Investors, however, still the investment banking business as cyclical and lacking in both scale and scope to compete with its US banking cousins.
SLOW MOVER ON DIVIDENDS
The recent decision by the regulatory authorities to remove restrictions on banks paying dividends, and engaging in share buy-backs, had prompted hopes that Barclays would pursue a more progressive dividend policy.
Those hopes have been dashed. The bank has highlighted evidence of a consumer recovery and early signs of a more favourable rate environment. A short term rise in interest rates would be a key driver for a further re-rating of Barclays, and the UK banks sector in general.