Barclays’ third quarter update beat expectations

Positive update comes despite macroeconomic uncertainty, conduct charges and Brexit concerns.

Article updated: 24 October 2018 9:00am Author: Ian Forrest

  • Despite reporting a 32% increase in third quarter profits, the market response was fairly muted with shares up only 1% in early trading
  • But when considering litigation and conduct charges of £2.1bn, the banks’ profits are dragged lower
  • We continue to see the shares as no better than a ‘hold’ for medium risk investors

Barclays beat market expectations today with its third quarter trading update thanks to a big improvement at its investment banking division. The 19% increase in revenues was largely due to a much better performance in equity trading, although lending to corporates and advice fees were down.

Pre-tax profit in the first nine months of the year rose 23% to £5.3bn, although that excludes £2.1bn in litigation and conduct charges. In the third quarter profits rose 32% with an 18% rise in profits at Barclays UK operations in the period.

The return on tangible equity (RoTE) has been 11.1% in the year so far, and the bank said it was on track to achieve its target of RoTE of more than 9% in 2019. In terms of the outlook the CEO made particular mention of concerns relating to Brexit weighing on the market, but the interim dividend was increased to 6.5p and the capital position remains above target.

These are good figures from Barclays today with the investment banking performance especially notable as that has been a weak point for some time. The response from the market was fairly muted with the shares up only 1%, possibly due to the ongoing weight of litigation and conduct costs bearing down in the company and concerns about the current global economic situation. The dividend yield is 3.9%, so we continue to see the shares as no better than a ‘hold’ for medium risk investors and HSBC remains our favoured stock in the banking sector.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Ian Forrest portrait photo
Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.