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FTSE 100: Barclays posts £2bn profit

A branch of Barclays Bank is seen, in London, Britain, February 23, 2022.  REUTERS/Peter Nicholls
Barclays reports third quarter profit inches higher. Photo: Peter Nicholls/Reuters

Barclays (BARC.L) profits before tax climbed 6% to £2bn, as the bank reported it achieved income growth in all three of its businesses.

The FTSE 100 bank reported it earned a profit before tax of £2bn in the July-September period, up from £1.9bn in the same period a year ago.

Income in the consumer, cards and payments business jumped 54% £1.24bn as interest rates push up borrowing costs.

Net profit for the third quarter reached £1.51bn, up from £1.37bn in the same quarter of 2021. Net margin interest was 2.78%, up from 2.59% the previous year.

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Total income climbed to £5.95bn and its common equity Tier 1 ratio reached 13.8%. This is a key measure of balance-sheet strength.

Impairment charges set aside for expected bad loans more than tripled to £381m as it prepared itself for a potential rise in bad debts, with customers struggling with soaring food and energy bills.

“We delivered another quarter of strong returns, and achieved income growth in each of our three businesses, with a 17% increase in group income to £6.4bn," CEO C. S. Venkatakrishnan, said.

Barclays reported income in the fixed income, currencies and commodities business (FICC) rose 63% in the first nine months of the year.

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"Our performance in FICC was particularly strong and we continued to build momentum in our consumer businesses in the UK and US. We are ready to provide support for customers and clients facing an uncertain economic environment and higher cost pressures. Whether helping retail customers to manage their finances or corporate clients navigate markets volatility, we will continue to be focused on meeting their needs,” Venkatakrishnan added.

The FTSE-100 listed lender said group income rose 9% to £6bn which included a £0.5bn charge related to the over-issuance of securities.

Bad debt provisions were £0.4bn, up from £0.1bn last year reflecting the “deteriorating macroeconomic forecast” but the bank said business failures remain below historical levels.

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Barclays said its diversified income streams position the group well for the current economic and market environment including rising interest rates.

“On the whole, Barclays has had a strong quarter which has offset some of the damage caused earlier in the year by the over-issuance of securities in the US, which is now largely recognised and therefore contained," Richard Hunter, head of markets at Interactive Investor, said.

"The impact of the over-issuance has seen some benefit from the positive impact of hedging against the loss, although the headline resulting write-off of £966m has clearly dragged on profits.

"However, it says much for the size and diversity of the group’s income streams when the headline numbers have for the most part comfortably withstood not only this oversight, but also an additional provision for potential bad losses. For the quarter, a further provision of £381m brings the cumulative figure for the year to £722m, which compares to a release last year of £622m. Taken together, this is a significant swing of over £1.3bn, yet the key metrics show improvement virtually across the board."

The bank is targeting a return on total equity (RoTE) of greater than 10% in 2022.

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