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Barclays (BCS - Free Report) reported third-quarter 2022 net income attributable to ordinary equity holders of £1.51 billion ($1.78 billion), up 10% from the prior-year quarter.
The results for the first nine months of 2022 were impacted by £0.6 billion worth of net of tax charges related to the over-issuance of securities in the United States.
Barclays’ quarterly results were aided by a rise in revenues, partly offset by higher expenses. In the reported quarter, the company recorded a substantial year-over-year rise in credit impairment charges.
Revenues Improve, Expenses Rise
Net operating income was £5.57 billion ($6.56 billion), up 4.2% year over year.
Operating expenses (excluding litigation and conduct costs, and UK bank levy) totaled £3.94 billion ($4.64 billion), up 14.3 % year over year.
The cost-to-income ratio was 60%, down from 65% a year ago.
In the reported quarter, Barclays recorded credit impairment charges of £381 million ($448.6 million), up significantly from the year-ago quarter.
Pre-tax income was £1.97 billion ($2.32 billion), up 5.6% year over year.
Segmental Performance Mixed
Barclays UK: Profit before tax was £762 million ($897.2 million), up 69% from the year-ago quarter. The rise was driven by higher net operating income.
Barclays International: Profit before tax was £1.40 billion ($1.65 billion), down 10.3% year over year. The fall was due to the weak performance of the corporate and investment bank division.
Head Office: Loss before tax was £193 million ($227.2 million), broader than the loss incurred in the prior-year quarter.
Balance Sheet & Capital Ratios Strong
Total assets as of Sep 30, 2022, were £1,726.9 billion ($1,922.5 billion), up 8.7% from the prior-quarter end.
Total risk-weighted assets increased 1.8% from the prior quarter to £350.8 billion ($390.5 billion) as of Sep 30, 2022.
As of Sep 30, 2022, the Common Equity Tier 1 (CET1) ratio was 13.8%, up from 13.6% as of Jun 30, 2022.
Guidance
Management expects credit impairment charges at a portfolio level to trend toward a through-the-cycle loan loss rate.
Barclays expects total operating expenses of £16.7 billion for 2022, with a reduction in litigation and conduct charges of £0.3 billion, offset by headwinds from foreign exchange and other movements.
Over the medium term, the CET1 ratio is expected to be 13-14%.
Barclays expects to deliver a return on tangible equity of more than 10% in 2022 and a cost-to-income ratio of less than 60% in the medium term.
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.
F.N.B. Corporation’s (FNB - Free Report) third-quarter 2022 adjusted earnings per share of 39 cents outpaced the Zacks Consensus Estimate of 36 cents. The bottom line reflects a 14.7% rise from the prior-year quarter.
The results were primarily aided by a rise in net interest income and solid loan demand. Higher interest rates supported growth in margins. However, increased expenses, lower fee income and rising provisions were the undermining factors for FNB.
BankUnited, Inc.’s (BKU - Free Report) third-quarter 2022 earnings per share of $1.12 outpaced the Zacks Consensus Estimate of $1.01. The bottom line grew 19.1% from the prior-year quarter.
BKU’s results benefited from higher net interest income, a decent rise in loan balance and increasing rates. However, subdued fee income performance, a rise in expenses and an increase in credit costs acted as headwinds.
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Barclays (BCS) Q3 Earnings Increase Y/Y, Revenues & Costs Rise
Barclays (BCS - Free Report) reported third-quarter 2022 net income attributable to ordinary equity holders of £1.51 billion ($1.78 billion), up 10% from the prior-year quarter.
The results for the first nine months of 2022 were impacted by £0.6 billion worth of net of tax charges related to the over-issuance of securities in the United States.
Barclays’ quarterly results were aided by a rise in revenues, partly offset by higher expenses. In the reported quarter, the company recorded a substantial year-over-year rise in credit impairment charges.
Revenues Improve, Expenses Rise
Net operating income was £5.57 billion ($6.56 billion), up 4.2% year over year.
Operating expenses (excluding litigation and conduct costs, and UK bank levy) totaled £3.94 billion ($4.64 billion), up 14.3 % year over year.
The cost-to-income ratio was 60%, down from 65% a year ago.
In the reported quarter, Barclays recorded credit impairment charges of £381 million ($448.6 million), up significantly from the year-ago quarter.
Pre-tax income was £1.97 billion ($2.32 billion), up 5.6% year over year.
Segmental Performance Mixed
Barclays UK: Profit before tax was £762 million ($897.2 million), up 69% from the year-ago quarter. The rise was driven by higher net operating income.
Barclays International: Profit before tax was £1.40 billion ($1.65 billion), down 10.3% year over year. The fall was due to the weak performance of the corporate and investment bank division.
Head Office: Loss before tax was £193 million ($227.2 million), broader than the loss incurred in the prior-year quarter.
Balance Sheet & Capital Ratios Strong
Total assets as of Sep 30, 2022, were £1,726.9 billion ($1,922.5 billion), up 8.7% from the prior-quarter end.
Total risk-weighted assets increased 1.8% from the prior quarter to £350.8 billion ($390.5 billion) as of Sep 30, 2022.
As of Sep 30, 2022, the Common Equity Tier 1 (CET1) ratio was 13.8%, up from 13.6% as of Jun 30, 2022.
Guidance
Management expects credit impairment charges at a portfolio level to trend toward a through-the-cycle loan loss rate.
Barclays expects total operating expenses of £16.7 billion for 2022, with a reduction in litigation and conduct charges of £0.3 billion, offset by headwinds from foreign exchange and other movements.
Over the medium term, the CET1 ratio is expected to be 13-14%.
Barclays expects to deliver a return on tangible equity of more than 10% in 2022 and a cost-to-income ratio of less than 60% in the medium term.
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-eps-surprise-chart | Barclays PLC Quote
Currently, Barclays carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of U.S. Banks
F.N.B. Corporation’s (FNB - Free Report) third-quarter 2022 adjusted earnings per share of 39 cents outpaced the Zacks Consensus Estimate of 36 cents. The bottom line reflects a 14.7% rise from the prior-year quarter.
The results were primarily aided by a rise in net interest income and solid loan demand. Higher interest rates supported growth in margins. However, increased expenses, lower fee income and rising provisions were the undermining factors for FNB.
BankUnited, Inc.’s (BKU - Free Report) third-quarter 2022 earnings per share of $1.12 outpaced the Zacks Consensus Estimate of $1.01. The bottom line grew 19.1% from the prior-year quarter.
BKU’s results benefited from higher net interest income, a decent rise in loan balance and increasing rates. However, subdued fee income performance, a rise in expenses and an increase in credit costs acted as headwinds.