Barclays crushes expectations for the third quarter as provisions for mortgage losses fall
Barclays Bank building
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Barclays on Friday reported a net profit of £611 million ($797.7 million) for the third quarter, as the British lender attempts to plot a recovery from the coronavirus pandemic.
The bank’s net profit attributable to shareholders more than doubles analyst expectations of £273.5 million, comes in part due to a sharp reduction in coronavirus-related impairment charges.
In the first half of 2020, the British lender posted a net income of £695 million after adding another £1.6 billion of loan loss provisions in the second quarter.
This time around, cash set aside to accommodate bad loans amounted to just £608 million, well below the £1 billion expected.
“In the first half of this year we took a very, very robust impairment charge and our impairment reserves, so our reserves for credit losses, is well north of £9 billion right now,” Barclays CEO Jes Staley told CNBC’s “Squawk Box Europe” on Friday.
“That is the highest level of reserves that we have ever had, so we feel that we are very well situated in our balance sheet to deal with whatever economy we face in the latter part of this year and next year.”
- Common equity tier one capital (CET1) ratio was 14.6%, up from 14.2% at the end of the first half.
- Group income hit £5.2 billion, down from £5.54 billion in the third quarter of 2019.
- Return on tangible equity (RoTE) was 5.1%, up from 0.7% the previous quarter and -2.4% for the third quarter of 2019.
The bank reported a net loss of £292 million for the same period in 2019 after being hit by $1.4 billion ($1.8 billion) worth of insurance claims.
Major lenders have generally surprised to the upside so far this earnings season, with UBS easily surpassing expectations earlier this week to post a net income to $2.1 billion.
Barclays shares are down more than 42% since the turn of the year.