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(Alliance News) - Barclays PLC on Friday said it delivered a "resilient" performance in the third quarter of 2020 with international income offsetting challenges in core UK and consumer divisions.
The lender got the UK bank reporting season underway with higher third-quarter profit and reassurance that loan impairments are set to be lower in the second half of the year than the first and lower still in 2021, despite the ongoing Covid-19 pandemic.
Shares in the FTSE 100-listed Barclays were up 4.6% at 109.06 pence each on Friday morning in London.
Barclays said pretax profit for the three months ended September came in at GBP1.15 billion, up sharply from GBP246 million a year earlier, bumping up its return on tangible equity to 5.1% from 2.4%.
Third-quarter group income declined 6% to GBP5.20 billion from GBP5.54 billion, however.
The company's core UK division saw a 16% year-on-year drop in quarterly income to GBP1.55 billion, while International income increased by 1% year-on-year to GBP3.78 billion.
Lower risk-weighted assets, however, meant its CET1 ratio improved to 14.6% from 13.8% at the end of December and 13.4% in September 2019.
Barclays booked a credit impairment charge of GBP600 million, up 32% annually but down 63% quarterly. It expects impairment charges to be "materially" lower in the second half of 2020 compared to the first and to be lower again in 2021 from 2020.
The lender did not declare a dividend, though Chief Executive Officer James Staley said he recognises "the importance of capital returns to shareholders and will provide an update on its policy and dividends at full year results".
On its future, Barclays said outlook remains uncertain and is subject to the "evolution and persistence of the Covid-19 pandemic and the outcome of Brexit negotiations".
It expects certain headwinds to income in its UK division to persist in 2021 including the low interest rate environment. CIB performance driven by Markets, the franchise is well positioned for the future.
Outlook for the Consumer, Cards & Payments division remains uncertain, but the company's Corporate & Investment Bank business remains well positioned for the future.
Costs, excluding litigation and conduct, for full-year 2020 are expected to be broadly flat.
"We have now delivered some GBP25 billion through the government support measures to UK businesses. This includes 296,000 Bounce Back Loans totalling GBP9.2 billion, around GBP3 billion under the Coronavirus Business Interruption Loan Scheme programmes, and GBP12.4 billion through the Covid Corporate Financing Facility. In addition, we have helped businesses and institutions to access global capital markets, including underwriting over GBP1 trillion of new issuance in Q220 and Q320," CEO Staley said on the company's Covid-19 response.
HSBC Holdings PLC follows Barclays in reporting results on Tuesday next week, followed by Bank of Ireland Group PLC on Wednesday, and both Lloyds Banking Group PLC and Standard Chartered PLC on Thursday. NatWest Group PLC is scheduled for Friday.
By Tapan Panchal; tapanpanchal@alliancenews.com
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