By Anna Peel. Originally published at ValueWalk.
Barclays PLC (LON:BARC) first quarter total income rose 10% to £6.5bn, reflecting a 26% increase in net interest income to £2.3bn and a 3% rise in other income to £4.2bn. Operating expenses were 15% higher, including a £523m litigation and conduct charge, relating to the overselling of US securities and customer compensation relating to an old loan book. As a result, pre-tax profit fell 7% to £2.2bn.
The £1bn buyback has been delayed for a second time. This is because of ongoing discussions with the SEC relating to the US securities scandal. Barclays says it’s committed to the programme and intends to start it “as soon as practicable”.
Q1 2022 hedge fund letters, conferences and more
The shares rose 1.2% following the announcement.
Barclay’s Earnings
Sophie Lund-Yates, Lead Equity Analysts at Hargreaves Lansdown:
“Barclays has posted a bright set of results. Tailwinds are now familiar across the sector, with rising interest rates and a buoyant housing market helping to lift income. Barclays also benefits from a more diversified income stream, and market volatility has helped income from trading rise too.
However bright these results, the cloud that hangs over Barclays persists. A mammoth blunder relating to the overselling of US securities means regulators are sniffing around, and the issue raises questions around governance and control, but ultimately shouldn’t cause a derailment of a large scale. The most taxing development right now is that the buyback has been delayed again, while discussions with the Securities and Exchange Commission rumble on.
Impairment charges have risen, with increasing loan defaults creeping in. Things are far from crisis levels, but a steep economic downturn would hurt all banks, and that includes Barclays.”
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