Barclays reports £2.3bn pre-tax profit for the three months to the end of September
Barclays reported a £2.3bn pre-tax profit for the three months to the end of September, falling short of expectations due to underperformance in its investment banking division despite a boost from trading activities, reports BritPanorama.
The FTSE 100 lender’s profit was just below the internal consensus of £2.4bn, marking a 12% increase compared to the same period last year.
Total income in its investment banking sector was £3.1bn, shy of the forecast of £3.3bn, with only a 1% increase year-on-year. The equities segment surged 47% to £1bn, spurred by market volatility related to the US-Iran conflict.
However, the fixed income segment saw a significant decline, down 19% year-on-year to just over £1bn, attributed to reduced client activity and macroeconomic challenges, as reported by City AM.
CS Venkatakrishnan, Barclays’ CEO, is implementing a major restructuring of the investment bank, which is central to his multi-year strategy.
The group’s operating expenses reached £4.6bn for the period, with Structural Cost Actions (SCAs) amounting to £201m, a rise from £93m, as the bank focused on reducing costs through technology-enabled Full-Time Equivalent reductions.
To further these efforts, Barclays has set aside an additional £300m for SCAs in the fourth quarter of 2026 to enhance structural efficiency.
In Barclays’ UK retail banking division, income rose by 5% to £1.8bn, driven by earnings from structural hedges and growth in the mortgage balance.
This update comes less than a week ahead of Chancellor John Healey’s first Budget, amid expectations of significant tax changes targeting banks, particularly due to the substantial profits they have posted this year.
The Chancellor faces mounting pressure from the Labour party and trade unions to increase taxes on the banking sector.
One potential action could be an increase in the banking surcharge, currently set at three percent, which was reduced from eight percent during Jeremy Hunt’s time as Chancellor in 2023.
Restoring this original surcharge could yield approximately £2bn annually for the Treasury.
Barclays’ financial performance underscores the challenges faced by investment banks in a volatile global market. While the profit increase signals resilience, the mixed results highlight the pressures from both competition and regulatory scrutiny in the evolving landscape of the banking sector.
