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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Barclays Plc    BARC   GB0031348658

BARCLAYS PLC

(BARC)
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Delayed Quote. Delayed London Stock Exchange - 07/10 11:35:11 am
117.76 GBX   +5.18%
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Barclays buoyed in activist battle by investment banking gains

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02/21/2019 | 05:18am EDT
FILE PHOTO - The logo of Barclays bank is seen at its office in the Canary Wharf business district of London

LONDON (Reuters) - Barclays hit back at its activist shareholder critic by reporting rising annual income at its investment bank but sounded a note of caution with a 150 million pound provision against possible losses due to Brexit.

Barclays shares rose 3.5 percent on Thursday as investors looked past an annual profit of £3.5 billion that came in below expectations, focusing instead on progress in its investment bank where profit increased 15 percent.

Barclays Chief Executive Jes Staley is locked in a high-profile tussle over the bank's strategy with activist investor Edward Bramson, who believes the lender should ditch a costly plan to grow its investment bank and focus on other less risky parts of its business.

Bramson this month sought to ratchet up pressure on the bank by tabling a bid to win a board seat, a move which investors said was unlikely to succeed but which has sharpened focus on the performance of the investment bank.

The results gave ammunition to both sides in the debate. Staley pointed to the investment bank's return on tangible equity -- a key measure of profitability -- rising from 2 percent to 7 percent in 2018, close to the overall target of 9 percent for the group in 2019.

The bank's fixed income, currencies and commodities trading business weathered the volatile markets of the fourth quarter better than its Wall Street rivals with revenue down 6 percent compared with double digit falls at Goldman Sachs, Citi and JPMorgan.

Staley rebutted the accusation made by Bramson in a letter to his investors in December that Barclays has bought that improved performance at the expense of long-term profitability, by offering uncompetitive pricing to customers.

"If you have portfolio managers and traders at Blackrock and Brevan Howard making decisions to direct a trade to our trading desks that then generates revenue for the bank, we are not buying that business," he said.

Staley said that he has still not formally heard Bramson's proposals but will do so when the pair meet in New York next month.

Barclays Chairman John McFarlane recommended investors vote against electing Bramson to the bank's board in the lender's annual report.

BREXIT PROVISION

Profits fell 3 percent in the Barclays UK division on the Brexit provision as well as flat interest margins from lending that Barclays said could fall yet further in 2019.

The bank also saw a 20 percent decrease in corporate lending income, which it attributed to resources being deployed to higher-returning business elsewhere.

That offered ammunition to critics of the investment banking-led strategy, who argue against funnelling resources to a unit that still earns half of the bank's more profitable consumer and cards business.

"As a seller of Barclays, one’s principal concern is always that the results will be so bad that management is forced to revisit a strategy that is hardwired to destroy shareholder value," analyst Edward Firth at broker KBW said.

Barclays' £150 million Brexit provision followed similar moves by HSBC and Royal Bank of Scotland in recent days.

Barclays said the provision reflected the lesser of two downside economic scenarios, in which growth would slow to 0.3 percent and the country's unemployment rise to 5.7 percent.

CAPITAL CONCERNS

Barclays paid a dividend of 6.5 pence per share and signalled intentions to return more capital via dividend increases and buybacks when it was practical to do so.

The bank however reported its core capital ratio fell to 13.2 percent from 13.3 percent a year ago, a dip which is likely to renew a debate over its ability to return more capital to shareholders at a time when rivals Lloyds Banking Group and RBS are ramping up payouts.

Staley's total pay package for 2018 fell to £3.36 million, down from £3.87 million the previous year. He was the lowest paid among the four biggest British bank bosses.

(Reporting By Lawrence White and Iain Withers; Editing by Sinead Cruise/Keith Weir)

By Lawrence White and Iain Withers

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Financials
Sales 2020 21 281 M 26 933 M 26 933 M
Net income 2020 723 M 915 M 915 M
Net Debt 2020 - - -
P/E ratio 2020 32,6x
Yield 2020 1,70%
Capitalization 20 419 M 25 817 M 25 841 M
EV / Sales 2019
Capi. / Sales 2020 0,96x
Nbr of Employees 80 800
Free-Float 99,6%
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Technical analysis trends BARCLAYS PLC
Short TermMid-TermLong Term
TrendsBearishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 23
Average target price 143,77 GBX
Last Close Price 117,76 GBX
Spread / Highest target 99,6%
Spread / Average Target 22,1%
Spread / Lowest Target -38,0%
EPS Revisions
Managers
NameTitle
James Edward Staley Group Chief Executive Officer & Director
Nigel Paul Higgins Group Chairman
Mark Ashton Rigby Group Chief Operating Officer
Tushar Morzaria Group Finance Director & Executive Director
Timothy James Breedon Independent Non-Executive Director
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