Broker snap: Revenue outlook uncertain at Barclays

Seymour Pierce keeps a 'hold' on banking giant Barclays, saying that it is uncertain about future growth in revenues.The broker highlighted the Financial Times article that said that Barclays is to increase risk appetite amid internal expectations that a return on equity of 7.2% (versus an end of cycle target of 13%) is likely to stay flat or even fall. "However, as no universal bank has been allowed to fail, no capacity has been taken out of the system, and the bank is facing an uncertain revenue outlook and strong competitive head winds from the likes of Citi, RBS, BoA ML and UBS - which all would have failed without government support, in our view. Instead these banks are competing for the same business as Barclays," said analyst Bruce Packard.The broker thinks that if Barclays achieves its target, then earnings per share could increase to over 50p, compared with 30p in 2010.Nevertheless, Seymour Pierce remains sceptical over revenues and stays with its cautious recommendation and target price of 310p.---bc