Barclays Beats 3Q Market Expectations Despite Impairment Charge --Update

--Barclays exceeded market expectations on net profit, pretax profit and total income for the third quarter

--The U.K. lender booked lower-than-anticipated impairments

--The bank said its outlook depends on the outcome of the coronavirus pandemic and Brexit negotiations

By Sabela Ojea

Barclays PLC on Friday reported third-quarter total income, net profit and pretax profit that were higher than the market had expected despite booking a considerable amount of provisions.

The FTSE-100-listed lender cautioned that its outlook is dependent on the coronavirus pandemic, as well as on the outcome of the Brexit negotiations. "Certain headwinds to income in Barclays U.K. are anticipated to persist in 2021, including the low interest rate environment," it added.

Regarding its full-year costs, the bank expects them to be flat compared with the prior year. However, it noted that it will evaluate a reduction of structural costs, which could result in additional charges.

U.K. bank posted pretax profit of 1.15 billion pounds ($1.50 billion) compared with GBP246 million for the same period a year earlier. Pretax profit was expected to rise to GBP507 million, according to the bank's own compilation of estimates.

Barclays had a credit impairment charge of GBP608 million, lower compared with forecasts of GBP1 billion, taken from Barclays's consensus. The lender said that it expects to book a second-half impairment charge materially below the one booked in the first half, noting that it is likely that the impairment charges for 2021 will be below those of 2020.

Net profit for the quarter rose to GBP611 million from a loss of GBP292 million for the third quarter of 2019. Net profit was expected at GBP201 million, according to the bank's consensus.

Total income, on the other hand, decreased to GBP5.20 billion from GBP5.54 billion for the year-earlier period. It was anticipated to decline to GBP4.85 billion, according to the bank's compilation of forecasts.

The bank ended the period with a common equity Tier 1 ratio--a key measure of balance-sheet strength--of 14.6%, up from 13.8% as at Dec. 2019.

Return on tangible equity increased to 5.1% compared with a negative 2.4% RoTE in the third quarter of 2019. Barclays still targets a RoTE of more than 10%, it added.

Write to Sabela Ojea at [e-mail]; @sabelaojeaguix

(END) Dow Jones Newswires

October 23, 2020 03:18 ET (07:18 GMT)

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