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Barclays posts record profits after surge in investment banking

A Barclay's trader works on the floor of the New York Stock Exchange, July 3, 2012. REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS)
Barclays' investment bank boosted its Q3 results. Photo: REUTERS/Brendan McDermid (Brendan McDermid / reuters)

Barclays (BARC.L) said the bank is "well positioned for a rising rate environment" as it went into its fourth quarter, reporting better-than-expected results on Thursday.

It said it has a "highly liquid, well-funded, growing deposit base."

In the first nine months of Barclays' financial year, the bank brought in a record nine-month profit before tax of £6.9bn ($9.5bn). Q3 net income was £1.45bn, up from £611m last year.

The strong results were partly due to a surge in trading and advisory mandates in its investment bank, which reaped bumper fees.

It reported profit before tax of £2bn ($2.8bn) for the July-September period, better than the £1.6bn average of analysts' forecasts and double the £1.1bn it made in the same period a year ago.


Year-to-date Income was flat at £16.8bn, despite a 9% depreciation of average USD against GBP.

"While the CIB performance continues to be an area of strength for the Group, we are also seeing evidence of a consumer recovery and the early signs of a more favourable rate environment," said James Staley, Barclays CEO.

"Against that backdrop, we are focused on balancing cost efficiencies with further investment into high-returning growth opportunities."

The results were boosted by the British bank releasing £622m in cash which it had set aside for bad debt charges that have yet to materialise, after government support measures propped up businesses.

Read more: Lloyds Bank to shut 48 branches amid decline in customer visits

Meanwhile, total operating expenses increased 6% to £10.7bn, due to structural cost actions of £392m primarily relating to the real estate review in the second quarter, higher performance costs, and continued investment and business growth.

This was partially offset by the benefit from the depreciation of average USD against GBP and efficiency savings and resulted in a cost: income ratio of 64%.

On the retail side there was an increase in credit and debit card spending, which showed a steady increase through the quarter, although it was notable that on the credit card side of things consumers appeared reluctant to add to their liabilities, with borrowings there falling to £8.6bn.

Barclays shares are up 35% year-to-date and were sitting 1% below their 12-month high before the market opened. Shares fell 0.3% in early trade following the update.

Watch: Will interest rates stay low forever?