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The Barclays and HSBC buildings are seen amid the coronavirus disease (COVID-19) outbreak, in London, Britain, October 20, 2020.
Matthieu Childs | Reuters
LONDON – Barclays beat second quarter earnings expectations on Wednesday and boosted shareholder returns, with its investment and equity banking business posting record revenues.
The UK lender posted quarterly attributable profit of £ 2.1bn ($ 2.9bn), up from £ 90m for the second quarter of 2020. Analysts expected a reported net profit of £ 1.7 billion for the three months to the end of June, according to Refinitiv data.
Equity and investment banking commissions increased by 38% and 27% respectively in the second quarter.
Barclays also announced an increase in capital distributions to shareholders, with a semi-annual dividend of 2p per share and a new share buyback of up to £ 500million.
The bank also saw a significant reduction in credit loss provisions, as shown in its first quarter earnings report, and was able to free nearly £ 800million from its credit impairment provisions, up from £ 1. £ 6 billion incurred for the same period of 2020.
“Our profitability, strong capitalization and balance sheet have enabled us to increase capital distributions to shareholders,” CEO Jes Staley said in a statement, adding that the bank was witnessing a resumption of activity in its operations.
“Our CIB (corporate and investment banking) activity is well positioned to benefit from the continued growth of the debt and equity markets, with Global Markets and Investment Banking commission income up 36% since 2019, and our strong retail business is poised to support and benefit from a consumer recovery. “
Barclays shares gained 4.7% at the start of trading.
Other highlights of the quarter:
- Group revenue reached £ 5.4bn, up from £ 5.34bn a year ago.
- The CET 1 ratio, a measure of bank solvency, stood at 15.1%, up from 14.2% a year ago.
Fixed income, currencies and commodities (FICC) trading activity fell 37% in the first half of the year from a record high in the first half of 2020, as coronavirus-induced market volatility resulted in an increase in trading volumes.
Barclays has previously indicated that it expects costs to increase in 2021 from the previous year, due to coronavirus-related spending, a real estate review, new structural cost measures and salary increases.
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