Barclays (BARC) Shares Dropped 8.78% on Q3 Earnings Results

The Barclays PLC (LON: BARC) share price dropped 8.78% after releasing its Q3 results for the three months ended 30 September 2023. The group reported a return on tangible equity (RoTE) of 11.0% with a pre-tax profit of £1.9 billion (compared to £2.0 billion in Q3 2022).

Excluding the effects of the over-issuance of securities in the prior year, group income saw a 2% year-on-year decrease, amounting to £6.3 billion. Barclays UK income declined by 2% to £1.9 billion, primarily due to the impact of transferring Wealth Management & Investments (WM&I) to Consumer, Cards, and Payments (CC&P).

However, Barclays UK income increased by 1% when excluding the transfer, driven by net interest income growth resulting from higher rates, including continued structural hedge income. Product dynamics in deposits and mortgages partially offset this growth.

Corporate and Investment Bank (CIB) income fell 6% to £3.1 billion. This decline was attributed to reduced client activity in both Global Markets (compared to the exceptional FICC performance in Q3 2022) and decreased Investment Banking fees. 

These declines were more than offset by higher Corporate income driven by increased rates and the non-recurrence of fair value losses on leverage finance lending from the previous year. CC&P's income experienced a 9% increase, reaching £1.4 billion. This increase was driven by higher balances in US cards and the advantageous transfer of WM&I from Barclays UK.

The group's total operating expenses decreased by 4% year-on-year to £3.9 billion. This reduction was due to efficiency savings, lower litigation and conduct charges, and the fact that it more than offset the effects of inflation, business growth, and investments.

Credit impairment charges amounted to £0.4 billion, with a loan loss rate (LLR) of 42 basis points.

C. S. Venkatakrishnan, Barclays’ Group Chief Executive, commented: “We delivered an 11.0% RoTE in Q3, against a mixed market backdrop, as we continued to manage credit well, remained disciplined on costs and maintained a strong capital position, with a Common Equity Tier 1 (CET1) ratio of 14.0%. We see further opportunities to enhance shareholder returns through cost efficiencies and disciplined capital allocation across the Group. We will provide an Investor Update on FY23 results, which will include setting out our capital allocation priorities, as well as revised financial targets.”

Barclays (BARC) share price. 

On Tuesday, the Barclays share price dropped 8.78% to trade at 131.44p, from Monday’s closing price of 144.09p. It closed the session at above 134p.

Despite the share price decline, which has continued on Wednesday (BARC is currently down 0.95%), UBS analysts remain bullish, stating that it is still the “cheapest bank around” and “worth owning.” The investment bank currently has a 200p price target on Barclays shares.