Barclays: Building back better?
The investment bank has proven its value in a tough year, but revenue stability is the challenge ahead.
To judge by some of its financials, Barclays looks in as good shape as a pandemic can allow in late 2020. Before credit provisions, pre-tax profits were up 65% in the first nine months of the year.
Parts of the investment bank, like its markets businesses, are flying. Its core equity tier-1 ratio is at a high of 14.6%.
But group revenues only rose 3%, and the same period in 2019 saw litigation and conduct charges of £1.5 billion that were not repeated in 2020. Strip those out and pre-provision profits fell by 29% year on year, despite an extra £2 billion of trading revenues that came with no added costs.
And while trading was the standout for the year, investment banking fees rose just 1%, in spite of a year of soaring issuance volumes in debt capital markets, Barclays’ biggest segment.
It is a mixed picture, but for Barclays management such results are a vindication of the diversification that comes from having an investment bank within the group.