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By Lawrence White and Iain Withers
LONDON, Oct 21 (Reuters) - Barclays reported a
doubling of third quarter profits, beating market expectations,
as it followed Wall Street rivals in reaping bumper investment
banking fees from a surge in advisory mandates and equities
trading.
The British bank on Thursday reported profit before tax of 2
billion pounds ($2.76 billion) for the July-September period,
better than the 1.6 billion pounds average of analysts'
forecasts and twice the 1.1 billion pounds it made in the same
period a year ago.
Barclays' advisory and equities business had a record
performance in the first nine months of the year, the bank said,
driving a return on equity for the overall investment bank of
16.4% compared to 10.5% a year ago.
"While the CIB (investment bank) performance continues to be
an area of strength for the group, we are also seeing evidence
of a consumer recovery and the early signs of a more favourable
rate environment," Barclays CEO Jes Staley said.
The results were boosted by the bank releasing 622 million
pounds in cash set aside for bad debt charges that have yet to
materialise, after government support measures propped up
businesses.
The provision release comes despite a turbulent period for
the British economy, with supply chain disruptions and fuel
shortages that flared up in September denting consumer and
business confidence.
Barclays nonetheless upgraded its economic forecasts for the
UK compared to the previous quarter and said it expected the
country’s GDP to hit pre-pandemic levels by early 2022.
But the bank warned that uncertainty remained relatively
high, with a significant number of jobs at risk of redundancy in
its key markets of the UK and US as government support measures
were withdrawn.
INVESTMENT BANK
Barclays is alone these days among British banks in
competing with Wall Street rivals on their home turf across the
main investment banking businesses of advisory, equities and
fixed income.
That helped it cash in on the surge in M&A fees that helped
U.S. peers such as Goldman Sachs and Morgan Stanley
smash earnings estimates for the third quarter, as global
merger volumes shattered all-time records.
Barclays reported investment banking income from advising on
deals rose to 971 million pounds in the third quarter from 610
million in the same period a year ago, while equities income
rose 10%.
The bank's fixed income, currencies and commodities (FICC)
division, however, saw income fall from 1 billion pounds in the
third quarter a year ago to 803 million pounds this year.
($1 = 0.7242 pounds)
(Reporting By Lawrence White, Iain Withers and Muvija M,
Editing by Rachel Armstrong and Carmel Crimmins)