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Barclays (BCS) Q1 Earnings & Revenues Improve Y/Y, Costs Rise

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Barclays (BCS - Free Report) reported first-quarter 2021 net income attributable to ordinary equity holders of £1.70 billion ($2.34 billion), up significantly from the prior-year quarter.

Shares of the company lost 7.1% in pre-market trading. However, the full day’s trading session will likely depict a better picture.

Results reflect a rise in revenues along with higher operating expenses. A significant decline in credit impairment charges was a major tailwind for the company.

Revenues Increase, Expenses Rise

Net operating income was £5.85 billion ($8.06 billion), up 40.2% year over year. The increase was mainly driven by a fall in credit impairment charges.

Operating expenses (excluding litigation and conduct costs) totaled £3.55 billion ($4.89 billion), up 9% year over year.

Cost to income ratio was 61%, up from 52% recorded a year ago.

Credit impairment charges decreased 97.4% year over year to £55 million ($75.8 million).

Pre-tax income was £2.40 billion ($3.31 billion), up significantly year over year.

Segment Performance Solid

Barclays UK: Profit before tax was £460 million ($634.1 million), up significantly from the year-ago quarter. The segment witnessed a rise in net operating income, higher expenses and lower credit impairment charges.

Barclays International: Profit before tax was £1.97 billion ($2.72 billion), up significantly year over year. The rise was driven by strong performances of both corporate and investment bank, and the consumer, cards and payments divisions.

Head Office: Loss before tax was £32 million ($44.1 million), narrower than the loss incurred in the prior-year quarter.

Balance Sheet & Capital Ratios Strong

Total assets as of Mar 31, 2021, were £1,379.7 billion ($1,899.2 billion), up 2.2% sequentially.

Total risk-weighted assets increased 2.4% from the prior quarter to £313.4 billion ($431.4 billion) as of Mar 31, 2021.

As of Mar 31, 2021, Common Equity Tier 1 ratio was 14.6%, down from 15.1% on Dec 31, 2020.

Guidance

Barclays expects to deliver meaningful return on tangible equity improvement in 2021 on a year-over-year basis.

Management projects 2021 impairment charges to be materially lower than that in 2020.

Expenses in 2021 will likely be above that in 2020.

Our View

Given Barclays’ restructuring and business-simplification efforts, its operating efficiency is expected to improve in the quarters ahead. However, given the tough operating backdrop, revenue growth might get hampered in the near term.

Barclays PLC Price, Consensus and EPS Surprise

 

Barclays PLC Price, Consensus and EPS Surprise

Barclays PLC price-consensus-eps-surprise-chart | Barclays PLC Quote

Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Foreign Banks

UBS Group AG (UBS - Free Report) reported first-quarter 2021 net profit attributable to shareholders of $1.82 billion, up 14% from $1.60 million in the prior-year quarter.

HSBC Holdings (HSBC - Free Report) reported first-quarter 2021 pre-tax profit of $5.8 billion, up 79% from the prior-year quarter.

ICICI Bank’s (IBN - Free Report) fourth-quarter fiscal 2021 (ended Mar 31) net income was INR44.03 billion ($602 million), up substantially from INR12.21 billion ($167 million) in the prior-year quarter.

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