Published: Thu, October 26, 2017
Business | By Max Garcia

Barclays bank boss defends strategy as share price tumbles

Barclays bank boss defends strategy as share price tumbles

The lender said that pre-tax profit jumped from £837m to £1.1bn as chief executive Jes Staley announced new financial targets.

Investors, though, did not seem that impressed as Barclays shares fell 5% in early trading on the FTSE 100.

That included a sharp 27 percent drop in macro income - which includes fixed income, currencies and commodities (FICC)- to 1.3 billion pounds, mirroring the weak quarter endured by Barclay's USA rivals.

Barclays boss Jes Staley has hailed the "end state" of the United Kingdom group's restructuring as the bank announced third-quarter earnings that nonetheless illustrated a hard period for its prized investment bank.

In the first half of the year, Barclays put £700m aside to cover costs relating to the scandal, which has engulfed the banking sector. However like Lloyds, Barclays has made no further provisions for PPI in the third quarter, despite the FCA kicking off a high profile advertising campaign.

The group's total PPI bill stands at £9.1bn.

Beyond the headline number, however, and Barclays' markets business didn't have much fun in the quarter, with the lack of volatility to blame.

"We did however see an improvement in profitability in Barclays UK, and a good underlying return from our consumer, cards and payments business, which partially offset the under-performance in markets".

He also brushed aside industry fears of a consumer debt boom in the United Kingdom, saying it is "not raising any significant alarm" at the bank, although he admitted Barclays is "keeping an eye" on it.

Barclays confirmed this morning its plans to create a separate entity within the group to allow it to "ring-fence" its United Kingdom retail bank.

But for the three months to 30 September, the group generated pre-tax profit of £1.11bn, which was well short of the consensus forecast of £1.4bn, although up 30% the same quarter a year ago thanks to lower operating expenses, litigation and conduct charges.

Analyst Gary Greenwood at Shore Capital called it a "disappointing" update, "well below" expectations, primarily due to weaker than expected performance from the investment banking operations.

Mr Staley himself has also come under fire this year after attempting to identify a whistleblower at Barclays. Barclays has already reprimanded Staley for his conduct, but the matter is still being investigated by the Financial Conduct Authority and the Prudential Regulation Authority. "It looks like they have succeeded", analysts at brokers KBW said.

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