Barclays Share Price Rallied 6.5% on New Divisions, FY23 Results

The Barclays PLC (LON: BARC) share price rallied 6.48% after announcing its annual results for the year ended 31 December 2023. The British international banking group also announced a revamped organisational structure, including new business segments. 

On Tuesday, a series of transformative initiatives were announced, including an operational restructuring, a £2 billion reduction in expenses, and a significant dividend boost to shareholders following a 6% drop in annual profits. 

The pre-tax earnings for the year ending December 31, 2023, were reported at £6.55 billion, marking a 6% decrease. Earnings for the fourth quarter stood at £110 million, a sharp decline from £1.3 billion in the same period the previous year.

Barclays has set a target to achieve £1 billion in gross savings in 2024, with a total of £2 billion in savings by 2026. Furthermore, the bank has committed to distributing a minimum of £10 billion to its shareholders through dividends and share repurchases between 2024 and 2026, emphasising a preference for share repurchases. 

An additional £1 billion in shares is slated for repurchase within the year. The bank observed increased credit impairment charges to £1.8 billion from £1.2 billion, attributed to an uptick in late payments on U.S. credit card accounts. 

The net interest margin improved to 3.13% from 2.86%, benefiting from higher interest rates and the advantageous impact of structural hedges, despite challenges such as decreased mortgage margins and diminished deposit volumes as savers sought higher returns elsewhere.

Corporate and investment banking revenue dropped by 4% to £12.6 billion, influenced by reduced activity among clients across global markets and investment banking sectors.

Barclays' CEO, CS Venkatakrishnan, outlined a reorganisation plan dividing the bank into five new units: Barclays UK; Barclays UK Corporate Bank; Barclays Private Bank and Wealth Management; Barclays Investment Bank; and Barclays US Consumer Bank, aiming to streamline operations and enhance efficiency.

The new business divisions shall be led by Vim Maru, appointed CEO of Barclays UK; Matt Hammerstein, appointed CEO of Barclays UK Corporate Bank; Sasha Wiggins was appointed CEO of Barclays Private Bank & Wealth Management; Denny Nealon will continue in his current role as CEO of Barclays US Consumer Bank and Barclays Bank Delaware.

Barclays share price. 

The Barclays share price rallied 6.48% to trade at 159.42p from Monday’s closing price of 149.72p.