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* Regulators set new CET1 target of 13.5%
* Bank warns 10% ROTE goal in 2020 could be hard to hit
* Q3 profit at 1.8 bln stg excluding conduct charges
* Bank reports 1.4 bln stg PPI charge
(Adds further details on performance)
By Lawrence White and Iain Withers
LONDON, Oct 25 (Reuters) - Britain's Barclays said
a worsening global economic outlook means it may be hard to meet
its profit targets, despite reporting better-than-expected
results at its under-pressure investment bank in the third
quarter.
The bank said it is on track to meet its 9% return on equity
goal for 2019, but that the economic environment means achieving
its targets next year will be tougher.
"We acknowledge that the outlook for next year is
unquestionably more challenging now than it appeared a year ago,
in particular given the uncertainty around the UK economy and
the interest rate environment," Chief Executive Jes Staley said.
Barclays reported profit before tax of 1.8 billion pounds
($2.31 billion) for the July-September quarter, above analyst
forecasts of 1.5 billion pounds, though those figures excluded a
previously announced provision against insurance mis-selling.
The lender also said it had agreed with regulators to
account its risk-weighted assets more in line with British
peers, resulting in an increase in its target core capital ratio
to 13.5%.
The figure stood at 13.4% at the end of the quarter, below
the target, but Barclays stuck with its earlier dividend
guidance despite being below its new core capital target.
That reflects its confidence it can continue to increase
income enough to support the payouts, something which some
analysts of the bank are more sceptical of.
BLAME THE ECONOMY
While Barclays blamed the global economy and interest rates
for its tougher outlook, many of its problems stem from
longer-term pressures on the investment banking industry
including high pay and falling income as technology slashes
trading commissions.
Barclays said it was facing a tough market in retail banking
in Britain, including a competitive mortgage market and
risk-averse consumers taking out less credit hitting its revenue
and margins.
The British bank has faced calls over the last year and a
half from activist investor Edward Bramson to pare back its
investment bank, which consistently produces weaker returns than
its retail and credit card businesses.
CEO Staley will point to the strong trading performance as
vindication of his strategy, as the lender tries to take on Wall
Street while European peers are retreating.
Profits at its investment bank rose 67% in the third quarter
compared to a year earlier, boosted by a 19% increase in fixed
income, currencies and commodities trading and an impressive 5%
increase in equities revenue where peers have struggled
recently.
The bank's profits were marred, however, by a 1.4 billion
pound provision to compensate customers mis-sold payment
protection insurance (PPI), in the middle of the 1.2-1.6 billion
pound range the bank had forecast.
The bank said it was still wading through more than two
million claims or requests for PPI information at the end of the
third quarter and could not be certain the provision it had
taken would be final, saying it would have a better idea at the
end of the year.
British banks were stung by a late surge in PPI queries
ahead of an August claims deadline, sending the industry's final
compensation bill above 43 billion pounds.
Royal Bank of Scotland on Thursday fell to a third
quarter loss due to a 900 million pound PPI charge and a weak
performance in investment banking.
($1 = 0.7785 pounds)
(Reporting by Lawrence White and Iain Withers, editing by
Rachel Armstrong and Jason Neely)
