Barclays has notched up its best-ever nine-month performance after surging trading in its investment banking arm helped it post higher-than-expected third-quarter profits.
The lender reported a £2 billion pre-tax profit haul for the three months to September 30 – nearly double the £1.1 billion seen a year ago, but down from £2.6 billion in the previous three months.
This brought the banking giant’s year-to-date profits to a record £6.9 billion.
Most analysts had been expecting third-quarter profits of £1.6 billion in the three months to September 30.
But Barclays signalled cost-cutting in its branch-based retail banking arm as it said the group will look to drive further efficiencies in its franchises and “planned structural cost actions” over the fourth quarter, including in Barclays UK.
Barclays refused to give more information at this stage on whether this would involve more branch closures.
But finance director Tushar Morzaria told reporters on a media call that “the march to making your business much more digital” was ramping up and that the firm is “making sure we keep in pace with that”.
The bank’s robust performance came after profits in the investment banking division surged 49% to £4.8 billion in the first nine months of the year, following a 51% jump in the third quarter to £1.5 billion.
Barclays followed the lead of investment banking rivals on Wall Street which have benefited from a leap in trading as markets have remained buoyant with the global economy rebounding from the pandemic.
The bank’s figures were also boosted as it released £622 million in the year to date of cash set aside to cover expected defaults amid the pandemic.
It booked net charges of £120 million in the third quarter after a £797 million release in the previous three months, but said impairments are returning to their normal rate.
Barclays chief executive Jes Staley said: “On top of a good first half, a strong third-quarter performance means Barclays has delivered its highest third-quarter year-to-date pre-tax profit on record in 2021.”
He added: “We are also seeing evidence of a consumer recovery and the early signs of a more favourable rate environment.
“Against that backdrop, we are focused on balancing cost efficiencies with further investment into high-returning growth opportunities.”
The firm’s Barclays UK business saw profits more than double to £451 million in the third quarter from £196 million a year ago as it was boosted by strong mortgage growth, thanks to a booming property market.
The group said it increased its mortgage portfolio by £2.3 billion in the third quarter.
Mr Staley said Barclays is expecting the UK economy to grow by 7% this year and said the strong growth should outweigh the impact of rising inflation, supply chain disruption and potential interest rate hikes, while customer defaults remain “benign”.
On the supply crisis, he said it was “manageable”, adding that the “long-term impact will be quite modest”.
Amid speculation over possible departure plans, Mr Staley reportedly said he plans to remain at Barclays for at least “another two years”.
Richard Hunter, at Interactive Investor, said Barclays “has again set the bar high for its peers to follow” with a balance sheet in “rude health”.