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Barclays' (BCS) Restructuring Aids Amid Revenue Volatility
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Barclays’ (BCS - Free Report) inconsistent top-line performance is a major near-term headwind amid a challenging economic scenario. However, the bank’s restructuring initiatives continue to help manage operating expenses.
Barclays has been witnessing volatility in both net interest income (NII) and net fee, commission and other income in the last few quarters, mainly on the back of a challenging operating backdrop.
In 2021, NII declined, but net fee, commission and other income rose marginally. However, in 2022 and the first quarter of 2023, both metrics witnessed a rise. The second quarter of 2023 witnessed an increase in net interest income and a decline in net fee, commission and other income, while the third quarter recorded a rise in both the metrics year over year. The fluctuating results over the years indicate Barclays’ lack of adaptability and resilience toward the ongoing economic turbulence.
The company’s earnings estimate for 2023 have been revised 1.3% lower over the past 30 days. Given the concerns and lack of positive estimate revisions, the price performance is not likely to improve in the near term.
BCS currently carries a Zacks Rank #4 (Sell). Shares of the company have lost 2% on the NYSE over the past six months against the industry’s growth of 4.3%.
Image Source: Zacks Investment Research
Despite the above-mentioned headwinds, Barclays have managed to improve efficiency in the recent past, evident by a decline in expenses. Total operating expenses increased in 2022 and witnessed a negative compound annual growth rate of 2.4% over the six-year period ended 2021. The downward trend continued in the first nine months of 2023. Overall costs are expected to remain manageable, supported by ongoing business restructuring initiatives. The bank plans to undergo further cost-saving measures to improve efficiency. Over the medium term, the cost-to-income ratio is targeted to be below 60%.
In sync with the business restructuring initiatives, Barclays reorganized its business into two divisions and divested several non-strategic and less profitable operations globally. In 2023, BCS acquired Kensington Mortgage, which will improve its mortgage business in the U.K. These strategic initiatives are likely to support the bank’s financials and position itself for sustained growth amid the current economic backdrop.
Foreign Banks to Consider
A couple of better-ranked finance stocks are Canadian Imperial Bank of Commerce (CM - Free Report) and Credicorp (BAP - Free Report) .
CM’s 2024 earnings estimates have remained unchanged in the past seven days. The company’s shares have gained 18.5% over the past three months. At present, CM sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
BAP’s 2023 earnings estimates have remained unchanged in the past seven days. The stock has returned 24.1% over the past three months. Currently, BAP also sports Zacks Rank 1.
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Barclays' (BCS) Restructuring Aids Amid Revenue Volatility
Barclays’ (BCS - Free Report) inconsistent top-line performance is a major near-term headwind amid a challenging economic scenario. However, the bank’s restructuring initiatives continue to help manage operating expenses.
Barclays has been witnessing volatility in both net interest income (NII) and net fee, commission and other income in the last few quarters, mainly on the back of a challenging operating backdrop.
In 2021, NII declined, but net fee, commission and other income rose marginally. However, in 2022 and the first quarter of 2023, both metrics witnessed a rise. The second quarter of 2023 witnessed an increase in net interest income and a decline in net fee, commission and other income, while the third quarter recorded a rise in both the metrics year over year. The fluctuating results over the years indicate Barclays’ lack of adaptability and resilience toward the ongoing economic turbulence.
The company’s earnings estimate for 2023 have been revised 1.3% lower over the past 30 days. Given the concerns and lack of positive estimate revisions, the price performance is not likely to improve in the near term.
BCS currently carries a Zacks Rank #4 (Sell). Shares of the company have lost 2% on the NYSE over the past six months against the industry’s growth of 4.3%.
Image Source: Zacks Investment Research
Despite the above-mentioned headwinds, Barclays have managed to improve efficiency in the recent past, evident by a decline in expenses. Total operating expenses increased in 2022 and witnessed a negative compound annual growth rate of 2.4% over the six-year period ended 2021. The downward trend continued in the first nine months of 2023. Overall costs are expected to remain manageable, supported by ongoing business restructuring initiatives. The bank plans to undergo further cost-saving measures to improve efficiency. Over the medium term, the cost-to-income ratio is targeted to be below 60%.
In sync with the business restructuring initiatives, Barclays reorganized its business into two divisions and divested several non-strategic and less profitable operations globally. In 2023, BCS acquired Kensington Mortgage, which will improve its mortgage business in the U.K. These strategic initiatives are likely to support the bank’s financials and position itself for sustained growth amid the current economic backdrop.
Foreign Banks to Consider
A couple of better-ranked finance stocks are Canadian Imperial Bank of Commerce (CM - Free Report) and Credicorp (BAP - Free Report) .
CM’s 2024 earnings estimates have remained unchanged in the past seven days. The company’s shares have gained 18.5% over the past three months. At present, CM sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
BAP’s 2023 earnings estimates have remained unchanged in the past seven days. The stock has returned 24.1% over the past three months. Currently, BAP also sports Zacks Rank 1.