We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Barclays (BCS) Gains as Q1 Earnings & Revenues Improve Y/Y
Read MoreHide Full Article
Shares of Barclays (BCS - Free Report) gained 7.4% following the release of its first-quarter 2023 results. The company reported net income attributable to ordinary equity holders of £1.78 billion ($2.16 billion), up 27% from the prior-year quarter.
Barclays’ results benefitted from an improvement in revenues. However, higher expenses hurt the results to some extent. Also, the company recorded a substantial year-over-year rise in credit impairment charges.
Revenues Improve, Expenses Rise
Total income was £7.24 billion ($8.79 billion), up 11.4% year over year.
Operating expenses (excluding litigation and conduct costs) totaled £4.11 billion ($4.99 billion), up 14.6% year over year.
The cost-to-income ratio was 57%, down from 63% a year ago.
In the reported quarter, Barclays recorded credit impairment charges of £524 million ($636.5 million), up significantly from the year-ago quarter.
Pre-tax income was £2.60 billion ($3.16 billion), up 16.3% year over year.
Segmental Performance Good
Barclays UK: Profit before tax was £754 million ($915.9 million), up 26.9% from the year-ago quarter. The rise was driven by higher total income.
Barclays International: Profit before tax was £1.93 billion ($2.34 billion), up 12.6% year over year. The rise was driven by the robust performance of the consumer, cards and payments division.
Head Office: Loss before tax was £84 million ($102 million), broader than the loss incurred in the prior-year quarter.
Balance Sheet & Capital Ratios Strong
Total assets as of Mar 31, 2023, were £1,539.1 billion ($1,903.4 billion), up 1.7% from the prior quarter end.
Total risk-weighted assets increased marginally from the prior quarter to £338.4 billion ($418.5 billion) as of Mar 31, 2023.
As of Mar 31, 2023, the Common Equity Tier 1 (CET1) ratio was 13.6%, down from 13.8% as of Mar 31, 2022.
2023 Guidance
Management expects the loan loss rate to be 50-60 basis points.
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% and a cost-to-income ratio of low 60%.
Our View
Given Barclays’ restructuring and business-simplification efforts, its operating efficiency is expected to improve in the quarters ahead. The company completed the acquisition of specialist residential mortgage lender — Kensington Mortgage Company Limited, which will strengthen its “product offering and capabilities in the UK mortgage market,” boost market share and capitalize on its low-cost funding base.
UBS Group AG (UBS - Free Report) reported first-quarter 2023 net profit attributable to shareholders of $1.03 billion, down 51.8% from the prior-year quarter.
UBS’ quarterly performance was worrisome, as there were increases in expenses. Lower revenues acted as another major headwind.
Nevertheless, the performance of the Personal & Corporate Banking division was impressive. UBS’ Asset Management arm, Group Functions, The Investment Bank and Global Wealth Management segments did not perform well.
ICICI Bank (IBN - Free Report) released fourth-quarter fiscal 2023 (ended Mar 31) results. Net income was INR91.22 billion ($1.1 billion), up 30% from the prior-year quarter.
IBN’s results were driven by a rise in net interest income and non-interest income, higher rates, and growth in loans and deposits. However, provisions increased in the quarter. Also, higher operating expenses posed as the undermining factor for IBN.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Barclays (BCS) Gains as Q1 Earnings & Revenues Improve Y/Y
Shares of Barclays (BCS - Free Report) gained 7.4% following the release of its first-quarter 2023 results. The company reported net income attributable to ordinary equity holders of £1.78 billion ($2.16 billion), up 27% from the prior-year quarter.
Barclays’ results benefitted from an improvement in revenues. However, higher expenses hurt the results to some extent. Also, the company recorded a substantial year-over-year rise in credit impairment charges.
Revenues Improve, Expenses Rise
Total income was £7.24 billion ($8.79 billion), up 11.4% year over year.
Operating expenses (excluding litigation and conduct costs) totaled £4.11 billion ($4.99 billion), up 14.6% year over year.
The cost-to-income ratio was 57%, down from 63% a year ago.
In the reported quarter, Barclays recorded credit impairment charges of £524 million ($636.5 million), up significantly from the year-ago quarter.
Pre-tax income was £2.60 billion ($3.16 billion), up 16.3% year over year.
Segmental Performance Good
Barclays UK: Profit before tax was £754 million ($915.9 million), up 26.9% from the year-ago quarter. The rise was driven by higher total income.
Barclays International: Profit before tax was £1.93 billion ($2.34 billion), up 12.6% year over year. The rise was driven by the robust performance of the consumer, cards and payments division.
Head Office: Loss before tax was £84 million ($102 million), broader than the loss incurred in the prior-year quarter.
Balance Sheet & Capital Ratios Strong
Total assets as of Mar 31, 2023, were £1,539.1 billion ($1,903.4 billion), up 1.7% from the prior quarter end.
Total risk-weighted assets increased marginally from the prior quarter to £338.4 billion ($418.5 billion) as of Mar 31, 2023.
As of Mar 31, 2023, the Common Equity Tier 1 (CET1) ratio was 13.6%, down from 13.8% as of Mar 31, 2022.
2023 Guidance
Management expects the loan loss rate to be 50-60 basis points.
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% and a cost-to-income ratio of low 60%.
Our View
Given Barclays’ restructuring and business-simplification efforts, its operating efficiency is expected to improve in the quarters ahead. The company completed the acquisition of specialist residential mortgage lender — Kensington Mortgage Company Limited, which will strengthen its “product offering and capabilities in the UK mortgage market,” boost market share and capitalize on its low-cost funding base.
Barclays PLC Price, Consensus and EPS Surprise
Barclays PLC price-consensus-eps-surprise-chart | Barclays PLC Quote
Currently, Barclays carries a Zacks Rank #2 (Buy). 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 2023 net profit attributable to shareholders of $1.03 billion, down 51.8% from the prior-year quarter.
UBS’ quarterly performance was worrisome, as there were increases in expenses. Lower revenues acted as another major headwind.
Nevertheless, the performance of the Personal & Corporate Banking division was impressive. UBS’ Asset Management arm, Group Functions, The Investment Bank and Global Wealth Management segments did not perform well.
ICICI Bank (IBN - Free Report) released fourth-quarter fiscal 2023 (ended Mar 31) results. Net income was INR91.22 billion ($1.1 billion), up 30% from the prior-year quarter.
IBN’s results were driven by a rise in net interest income and non-interest income, higher rates, and growth in loans and deposits. However, provisions increased in the quarter. Also, higher operating expenses posed as the undermining factor for IBN.