sized to an efficient delivery of its main role and those propositions that no longer fulfill either their role or the potential need, either to be scaled back or be exited, unless we have a clear competitive advantage in specific products and/or markets.
Notwithstanding our major markets offer only moderate growth, there are opportunities for us to grow and expand, for example, in Barclaycard, particularly in the U.S. The North/South corridor from Europe and the U.S. to and from Africa and the Middle East is a great opportunity, and we’re uniquely positioned to deliver this.
There are also significant opportunities in greater collaboration between our Personal and Corporate Banking and Barclaycard businesses to deepen penetration of each other’s clients and to share support activities.
At the same time, we believe there are untapped commercial banking opportunities with investment banking clients. All of these are good, well managed businesses, but Barclays as a whole is not seeing the full benefit of the opportunities that exist for synergy and cross-selling between them, and that needs to change.
John McFarlane - Executive Chairman of Board Good morning. This interim result demonstrates that we continue to make the required progress on earnings, capital and leverage. All businesses demonstrated good performance, although the cards business stood out. We also saw the investment bank put an incredible performance, particularly relative to peers.
The continued rundown of non-core was a highlight. It’s actually not until one looks back that we can see how far we’ve come, and I’d congratulate the management team in achieving this. Of course, we all understand that this doesn’t take us where we need to be, and therefore there is a great deal yet to do.
I have only been in my role for a very short period, so it’d be premature at this point to be absolutely definitive on the way forward. However, before Tushar takes you through the results himself, I’d like to take the opportunity to give you some early impressions that build on my recent shareholder letter and in particular discuss my three priority areas, which are: strategy, value creation and a strong performance culture.
So firstly a few observation about strategy. The key principle is that we should focus on core propositions, that are both significant and financially compelling, answering the questions, what are we good at and where are we good at it. In this respect, if I stand back from the group, I see that we derive virtually all of our profits from three major core markets; the U.K., the U.S. and South Africa.
Two of these are fully integrated broad scope propositions, the U.K. and South Africa, and the U.S. is a much more focused proposition with two of the businesses represented; Investment Banking and Barclaycard.
It’s self-evident that most of our near-term shareholder value therefore, is likely to be delivered from these markets, given the strength of our position. We should be looking to improve our market position in such markets. And so the strategic priority for Barclays is therefore to focus on what really matters and where it matters.
Beyond these three markets, Barclays does have an international network in Africa, Asia-Pacific, South Asia, Middle East, Continental Europe, Canada and Latin America, all of which remain important. However, we need to define the role of this network.
Essentially it falls into two categories: firstly, markets where we would seek to develop domestic propositions further, for example, certain African countries and countries where we have a significant Barclaycard presence such as Germany. Otherwise the role of the network is to be precisely that, a network, where its main role is to serve our major market clients internationally and major international clients in our core markets.
If defined in this way, going forward, it therefore should be focused and sized to an efficient delivery of its main role and those propositions that no longer fulfill either their role or the potential
Barclays PLC (LON:BARC) had its price target raised by analysts at Jefferies Group from GBX 340 ($5.28) to GBX 357 ($5.54) on Monday. They now have a "buy" rating on the stock. This rating was viewed 197 times. Read More. Tweet This.
"Over time, rather than targeting a particular payout ratio range, we will aim to maintain a sustainable and progressive dividend policy, recognising the importance of dividend yield in delivering returns to shareholders."
McFarlane did not issue new targets for the group, but confirmed current remaining targets remained in place.
His final priority was to "instil a high performance ethic and process" across the bank, with much more of a focus on customers and clients and to streamline and eliminate "unnecessary and cumbersome bureaucracy"
BARCLAYS INTERIMS IMPRESS BUT DIVIDEND FLAT AS MCFARLANE TARGETS ACCELERATED CHANGE
(ShareCast News) - Barclays first half results showed an strong increase in profits as it set aside a further £1.6bn provision for further litigation and mis-selling after paying the same amount in the period. Newly bestowed with an executive role as chairman, John McFarlane highlighted his pleasure at recent progress in the investment bank, which generated a 36% increase in profit before tax to £1.44bn in the six months to 30 June, saying the challenge for this business was to "convert this performance into sustainable economic returns through subsequent periods".
This helped group adjusted profit before tax of £3.7bn climb 11%, with statutory PBT up 25%, on adjusted net operating income down 2% to £12.0bn. Net income in the second quarter of £1.85bn was above the £1.8bn expectations.
The bank's Tier 1 capital stood at 11.1% as it lowered its leverage ratio to 4.1% and cut risk-weighted assets to £57bn from £75bn.
The core return on average equity also stood at 11.1% thanks to what it said was a solid return on average equity performance across the businesses driven by the profit increase and a 7% reduction in total adjusted operating costs, with a cost-income ratio of 60%. The return on average shareholders' equity was up to 7.7% from 6.5%.
Barclays said it made "progress on legacy litigation and conduct matters" after settlements of £1.6bn reached with a regulators in the US and UK among others due to forex and fixed interest rate swaps.
An additional provision of £800m was made in for the ongoing forex investigations and potential litigation, taking the total provisions to £2,050m, with another £850m added in the second quarter for UK customer redress provisions that took this to £1.03bn.
Adjusted basic earnings per share of 13.1p were up 20.2%, with statutory EPS of 9.9p up 41%.
"The results reported today represent continued good progress for the business," said McFarlane, adding that all core franchises had performed well.
"We need to accelerate the execution of the strategy," he added. "There is much more that can be done to delivery better returns for shareholders."
He highlighted the need to accelerate growth in earnings, return on equity, and capital generation.
"To do this, we intend to grow revenues at least in line with the market, reduce our group cost-income ratio into the mid 50s, accrete and deploy capital wisely, and thereby over time achieve a group return on equity above our cost of equity."
He said it was "appropriate" to plan for a flat 6.5p dividend for 2015, as management focuses on "improving the returns of the business and accelerating the implementation of the strategy, while maintaining capital strength".
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