Barclays report good performance

by Richard Kilner

Story link: Barclays report good performance

Yesterday Barclays issued its trading update, increasing speculation regarding the Royal Bank of Scotland’s upcoming statement which is due on 6 December.

Barclays’ update has been seen as reassuring, with analysts saying that the reasonably good UK retail information was probably generally applicable to what the RBS would have to say.

Barclays also had a good showing in the international retail sector, though RBS has less business in this area than its rival.

In addition, Barclays has already announced its writedown for subprime-related losses (£1.3bn, far less than was feared), whereas the RBS has yet to announce their own writedown figures.

It is unclear whether the RBS will be able to match such a comparatively low loss.

Barclays confirmed that it expected to meet its 4% earnings growth target for this year, news which prompted an increase of 5.4% in the firm’s share value, up to 524p.

The recent difficulties in the UK capital markets did not have as substantial an impact on the bank as it might have due to the firm’s business diversity.

Good growth had been seen in UK retail banking, especially in mortgages and deposits, with an improvement in the Barclaycard and unsecured lending bad debts.

The wealth management sector of the bank has been given an ‘excellent’ rating, whereas ‘very strong’ is how the income growth in international retail and commercial banking has been described. Barclaycard’s profitability has also increased.

James Hutson, an industry analyst with Keefe, Bruyette & Woods, said that the absence of any further BarCap risks would please the markets, as would the meeting of expectations in other areas of the business.

The bank has said that it has a good level of incoming deposits and that its liquidity is still solid.

There has also been progress in the costs to income ratio. In 2006, this was 52%, whereas this year it has improved to 50%.

Earnings are expected to be 68.8p per share, according to analysts, an increase from the EPS of 66.8p a year ago.