[ 2016-10-27 ]

Profits jump 35% at Barclays
The uncertainty caused by Brexit validates
Barclays’ strategy of diversity across
geographies and retail and investment banking, the
bank’s boss said as he reported a jump in
third-quarter profits.


Having both an investment and retail bank, a
strategy that has faced heavy criticism in recent
years, has put Barclays in a good position, Jes
Staley said. The bank operates in Europe and the
United States, the chief executive noted, pointing
out that it had a “US dollar business in our
investment bank in New York and a credit card
business in Germany”.

Barclays has previously said Ireland or Luxembourg
could become more important after Brexit if banks
are blocked from dealing with the European Union.
The bank has licences in both countries and has
said it would find it relatively easy to adapt.

The bank is prepared to make significant changes
to retain its position in Europe, Mr Staley said.
“We are the largest underwriter of European
sovereign debt and we want to maintain that
position. We are looking at our options and are
going to make sure we can prosecute strongly
across continental Europe.”

Barclays’ pre-tax profits rose 35 per cent to
£837 million in the third quarter, despite taking
a new £600 million provision for payment
protection insurance. Stripping out several
one-offs, profits were £1.7 billion, above
analysts’ estimates.

After a rocky period of several years, Barclays’
investment bank contributed strongly to the group,
with profits up 40 per cent. The increase follows
an upturn among America’s investment banks,
which has been driven by heightened market
activity by clients struggling to cope with market
turmoil and uncertainty about interest rates.
Barclays also benefited from sterling’s
weakness.

Barclays’ core tier-one ratio was unchanged at
11.6 per cent. The bank has mostly operated with
thinner capital than many of its peers and is
likely to continue to face questions about whether
it has an adequate financial buffer.

Mr Staley, who became chief executive in December,
pledged to step up the pace of restructuring and
has sold or shut various businesses deemed not to
be core to its future, which could include its
Italian and Egyptian operations. The bank
reiterated plans to close its non-core division by
the end of next year, in a move that would release
billions of pounds of capital.

Barclays’ revenues were broadly flat at £5.5
billion. Costs associated with its restructuring
weighted on its results.

Shares in Barclays rose 2.6 per cent to 186.65p in
early trading.

Lloyds yesterday saw third quarter profits fall 15
per cent to £811 million after it took another
£1 billion PPI provision taking its total bill to
£17 billion. The UK’s biggest retail bank
attempted to draw a line under the scandal, saying
it believed the latest hit would be its last large
one, with a deadline for new claims set to be
introduced in mid-2019.

Royal Bank of Scotland is expected to record a
£230 million loss when it reports results
tomorrow.



Deutsche Bank turns surprise profit

The Telegraph - Troubled German lender Deutsche
Bank a reported a surprise €256m (£229m) profit
in the third quarter, compared with a loss of more
than €6bn in the same period last year.

Deutsche outdid the expectations of analysts
surveyed by Factset, who had predicted it would
book a loss of €949m between July and
September.

The group said revenues increased to €7.5bn,
slightly up from 2015's third quarter, driven by
10-pc growth in its investment banking division.

Revenues declined in all other business areas,
which Deutsche said was largely down to the
"impact of the ongoing low interest rate
environment".

"We continued to make good progress on
restructuring the bank," chief executive John
Cryan said in a statement.

Financial markets and politicians have been
closely watching the fortunes of Germany's biggest
lender as it goes through a painful restructuring
and deals with the fallout of the financial
crisis.

It was labelled "the most important net
contributor to systemic risks in the global
banking system" by the IMF in June.

Mr Cryan acknowledged the "unsettling" effect of a
$14bn fine demand from the US Department of
Justice in September over Deutsche's role in the
mortgage-backed securities crisis, news of which
sent the bank's share price to historic lows of
€9.90.

"The bank is working hard on achieving a
resolution of this issue as soon as possible," Mr
Cryan said.

A source told AFP in late September the bank was
in talks with the DoJ to reduce its fine to around
€5.4bn, although the final figure could change.

Source - The Times

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