Barclays Share Discussion Threads

[smurfy2001] 18/1/2018 09:49

So Barclays are cutting investment banking jobs the previous CEO wanted to do? WOW!

[portside1] 18/1/2018 09:39

why has BOB DIAMOND never been charged with is fraud and lies

[johnwise] 18/1/2018 08:50

Barclays to cut 100 investment banking jobs in US and Europe

[johnwise] 18/1/2018 08:49

Barclays trader charged with fraud by US authorities

[bernie37] 17/1/2018 14:36

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Barclays Is Now A Value Play

Jan. 16, 2018 6:06 PM ET|8 comments| About: Barclays PLC (BCS), Includes: DB, JPM, LYG, RBS
Labutes IR
Labutes IR
Long/short equity, mutual fund manager, foreign companies, banks

(682 followers)
Summary

Barclays has completed its restructuring phase, it now has a good capitalization, and its strategy is now focused on improving returns.

Its current valuation of 0.6x book value seems to be too cheap, reflecting more its past issues rather than its business prospects.

Barcalys’ earnings are recovering and the bank has good dividend growth prospects, which may be an important catalyst for a re-rating of its shares.

Barclays (BCS) has an interesting risk-reward profile, given that its valuation seems to be too cheap for its business prospects. The bank has completed its business overhaul and is well-capitalized, but this is not reflected in its discounted valuation, making Barclays an interesting value play.

Company Overview

Barclays is one of the world’s largest banks, operating in retail and commercial banking, credit cards, investment banking, beyond other financial activities. Due to its large size, Barclays is a Globally Systemically Important Bank (G-SIB) with a buffer of 1.5%. It has a market capitalization of about $46 billion and trades in the U.S. on the New York Stock Exchange.

Following the global financial crisis, the bank restructured its business profile, focusing on consumer, corporate and investment banking, in its two core geographies of the U.K. and the U.S. Given its business profile, its main competitors include other U.K. retail banks, like Lloyds (LYG) or RBS (RBS), and U.S. banks with large investment banking operations, such as JP Morgan (JPM) or Bank of America (BAC).

The reshaping of its activities included the divestment of most non-core activities, like retail banking operations in Southern Europe and its Africa unit. Its non-core unit was able to reduce assets significantly over the past few years and was closed ahead of scheduled a few months ago.

Due to its business simplification in the past few years, Barclays has now only two major units, namely U.K. and International. This reorganization is consistent with the regulatory requirements of ring-fencing in the U.K., being the major driver to have its domestic retail activity separated from the rest of its business.

The Barclays U.K. division is its retail domestic activity and generates about one third of revenue, while its Barclays International includes the investment banking, global consumer, cards and payments business, and generates about two-thirds of revenue.

After so many years of restructuring and fixing past issues, such as misconduct, Barclays’ restructuring phase is now. Its current business profile is relatively well-diversified, both by business line and geography, and has reduced a lot its exposure to investment banking, which was one of its weakest businesses since the global financial crisis of 2008-09.

Barclays is now focused in its two home markets of the U.K. and the U.S., which means that its risk profile has improved. On the other hand, its growth prospects should be lower in the long-term, especially considering that its current exposure to Africa is now residual. This means that Barclays’ strategy is now focused on growth by providing a better customer service and be able to cross-sell more products to customers.

The bank is now much more focused on improving its operating performance and achieve an adequate level of profitability. It is redeploying capital towards businesses that have higher return prospects, particularly within corporate & investment banking. Its goal is to have higher profitability, targeting a return on tangible equity (RoTE) above 9%-10% by 2019, compared to only 4.4% in 2016.

Financial Overview

Regarding its financial performance, Barclays has reported relatively weak results over the past few years. The bank was impacted by several issues, including restructuring costs, low interest rates and a weak operating environment at its investment bank. However, Barclays seems to be improving and its most recent financial performance is clearly on the right path.

In 2016, Barclays was able to improve its financial figures, supported by a good performance of its core business while the size of non-core was reduced significantly. Risk-weighted assets in this unit decreased by 40% during the year, to £32 billion ($43.3 billion) at year-end. This means that the drag to the group’s profitability from non-core businesses was much lower than in previous years. This was a major reason why the bank was able to report profits in an annual basis, after reported losses both in 2014 and 2015.

Regarding its top-line performance, Barcalys’ revenues dropped by 2.7% to £21.5 billion ($29.1 billion) impacted mainly by non-core operations, while its core business posted an increase of 6% in revenues.

One of its main positive factors is its high net interest margin (NIM) within its core business. Barclays U.K.’s net interest margin is about 3.6% and above 4.2% in its International division, way above its peers due to a greater share of credit-card business.

Barclays has a market share of about 25% of the U.K. credit-card market, while its closest competitor is Lloyds with a similar market share. In the U.S. Barclays’ market share is naturally smaller, but is among the top 10 players in the market with a market share of about 3% by number of active accounts.

Given the current supportive macroeconomic background in both countries, this strong presence in the credit card market should be a strong support factor for its NIM. Additionally, higher rates in the U.S. and the recent interest rate increase in the U.K. are also positive factors for higher income in the next few quarters.

On the other hand, there exits some margin pressure in the U.K., due to intense competition in the mortgage market. Therefore, volume growth is needed to maintain interest income at current levels, which is increasingly difficult to achieve maintaining a disciplined underwriting criteria. This means that if Barclays decides to chase volume growth to maintain margins, it may lead to higher loan losses down the road.

[portside1] 17/1/2018 09:14

25 TRADING DAYS TILL FINALS 22FEB

[portside1] 17/1/2018 08:31

IN MY WORLD if I think something is to dear I do not buy I look for the deal that suits me , I do not need to be told and nanned

I went on 7 times to check for the best energy deal 6 months ago and ever time a different deal its all a con all these switch companies are crooks .

I found my own deal and got a good deal with bg for 3 years fixed for all 3 of my homes

[portside1] 17/1/2018 08:25

uneducated MPS sold off BT ENERGY WATER AND NOW WANT TO DESTROY THEM FROM MAKING PROFITS so their pension pots could be destroyed over the last 20 years uneducated simple MPS have damaged the uk
I VOTE CONSERVATIVE TO NOT INTERFER IN PRIVATE RUN COMPANIES NOW THEY ARE ALL LEFT WING MPS

[portside1] 17/1/2018 08:19

all pension funds are a gamble just look at BHS
AND OTHERS WHO HAVE GONE TO THE WALL AND NOW CARRILION

[tenapen] 15/1/2018 18:40

Capitalism isn't Working

Carillion isn't Working

More to come !

[reimomo] 15/1/2018 17:59

I don't believe Barclays will double the dividend next year.

YMMV.

[bernie37] 15/1/2018 17:07

Barclays appears to be undervalued in my opinion. It has a single digit P/E using this year’s forecast EPS figure. This suggests to me that the stock market is relatively downbeat about the company’s outlook. This could mean that Barclays is able to generate improving share price performance, with its double digit EPS growth forecast and the doubling of its dividend this year being potential catalysts.

[portside1] 15/1/2018 16:33

have put a lot of money into CNA and in my view will soon start to rise
and I mean a lot of money

[portside1] 15/1/2018 16:29

BERNIE lets hope that is the case its been a long 10 years

[portside1] 15/1/2018 16:27

cape have been in barcs since 07 and have been waiting since 08 for good news and the CEO OF WHICH WE HAVE HAD A FEW HAVE ALL FAILED SO FAR BUT WALKED AWAY WITH MILLIONS.

I JUST WISH FOR HONESTY FROM OUR BOD WHICH WE HAVE NOT BE GIVEN

[capeview] 15/1/2018 16:21

Manics, what winds me up, is the fact no matter which share Portside is in, it's almost the same speech. Company is rubbish, CEO's are useless etc etc.
You have to wonder why he keeps investing in these companies if they are that poor?

[bernie37] 15/1/2018 16:05

Portside1,2018 Barclays investment side may show fruit , big changes take time we should start showing better results.

[manics] 15/1/2018 16:02

portside1: we are reaching the point where I could literally cut and paste your posts from calendar 2017 as we progress 2018. Same frustrations. Same threats. Same outcome imo.

Nothing changes imo.

[portside1] 15/1/2018 15:53

lloyds m/c 51b

rbs m/c 36b

barcs m/c 33b

time is now running out for the whole bod who have failed to do anything over the last 3 years mc liar sacked Jenkins or did he lie

under the leadership of him and jes the company as sunken into a dismal bank

[bernie37] 15/1/2018 11:00

Barclays rose on the back of an upgrade to ‘buy’ at Investec.

[portside1] 15/1/2018 10:08

i will not be giving my consent its a open door to losing money by fraud . only idiots will give consent brainless dimwits like these women who think they are smart but are thick as planks