Barclays Raises Direction, Surprise Announces $670M Share Buyback
One Churchill Place skyscraper, the headquarters of Barclays Plc, in Canary Wharf in London, United Kingdom, on Thursday, January 7, 2021.
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British lender Barclays raised its guidance and announced a £500 million ($667 million) share buyback in its third-quarter earnings on Wednesday.
The bank said it now expects to deliver a full-year RoTE (return on tangible equity) of more than 11%, up from around 11%. Net interest income (excluding investment banking and headquarters) was also increased to more than £12.6 billion for the year, up from more than £12.5 billion.
“For the past nine quarters, we have robustly and consistently generated capital for our shareholders,” CEO CS Venkatakrishnan said in a statement.
“As a result, we have decided to bring forward part of our full-year distribution plans with the £500 million share buyback announced today and now plan to move to quarterly share buyback announcements. Our consistent and strong delivery has laid the foundation for stronger performance beyond 2026 and I look forward to sharing updated targets for the year ahead alongside our FY25 results 2028.”
It comes despite third-quarter pre-tax profit coming in at £2.1bn, slightly below analysts’ expectations and down 7% on the same period in 2024.
Shares in London-listed Barclays traded 4.9% higher on Wednesday.
Barclays share price
Revenues of £7.2bn for the quarter were hit by £235m of charges linked to the UK car loan scandal. It brings Barclays’ total charges related to the incident, which officials say saw millions of consumers unfairly sold on vehicle finance, to £325m. Barclays also said it had incurred a £110m impairment claim from a “single name” claimant.
Return on tangible equity for the quarter came in at 10.6%, down from 12.3% a year earlier, while earnings per share came in at 10.4p.
Revenues in the investment banking division increased by 8% year-on-year.
Strong investment banking earnings have helped propel European financial stocks higher this year Stoxx 600 bank index in the course of 2025 so far to gain more than 55%. Barclays shares are up more than 35% year-to-date.
Across the Atlantic, industry heavyweights JPMorgan Chase and Goldman Sachs also reported stronger-than-expected third-quarter earnings last week, with both companies’ results boosted by above-average earnings in their investment banking units.
The sector has been in the spotlight for states after concerns grew about the possibility of bad loans on Wall Street. The jitters hit European banking stocks on Friday, although stocks recovered quickly on confidence that there was no systemic problem.
Barclays has a significant presence in the US, including in investment banking, thanks to the 2008 acquisition of the investment banking and capital markets units of Lehman Brothers.
‘Unknown Unknown’
On Wednesday morning, RBC Capital Markets analyst Benjamin Toms pointed out that barring legal fees, Barclays would have posted a 6% pre-tax profit beat. He argued that based on an analysis of future tangible book value and RoTE, the company’s shares should trade at a higher multiple – but admitted that the banking sector is burdened with challenges, including uncertainty over the UK’s looming autumn budget.
“The bank’s US corporate exposures will be reviewed in light of local trends over the past few months,” he added. “(A) some of the biggest risks to our investment thesis are behavioral and litigation costs and ‘unknown unknowns’.”