Member Info for JamesYoung

I dug out all financial xls Barclays put on their website since 2009. I should have done that earlier and we have a chance to see path to pre-2009 financial crisis. The table below is the summary.

yr Total Income (£B) Tangible net assest (p/sh) EPS (p) Total shares (B) Comment

2009 31 NA 86.2 11.289

2010 31.44 346 30.4 11.724

2011 28.454 391 25.1 15.741

2012 29.043 373 34.5 14.559

2013 28.155 283 16.7 14.341

2014 25.728 285 17.3 16.063

2015 24.528 324 16.6 16.241

2016 21.451 290 10.4 15.605

2017 21.076 276 -10.3 18.660

2018 21.136 262 9.4 14.829

2019 21.632 262 24.4 17.190

2020 21.766 269 9.5 17.247

2021 21.94 292 37.5 17.000 Reinstate EPS 36.5 (over issurance)

2022 24.956 295 30.8 16.308

2023 25.378 331 27.7 15.430 Q4 rest ~8p

With dividend reinvestment, my guess is the volume should be substantially higher than a normal trading day. UK yahoo shows only 32M shares traded so far, which is about half of the average volume. Similarly, US ADR trading volume is also only 10M. Maybe the reinvestment happens at close? Anyone has an explanation?

My calculation of 15.1B share x 0.053 = ~£0.8B. If 50% applies dividend reinvestment, £400M can buy 210M ordinary shares.

BARC total share counts will reduce to Oct 23, 2023 post buy-back level by tomorrow. The damage of employee stock compensation has cost over 1 month buyback to level the hole.

Another note of the shorted shares, using today's price, their paper loss has reached £20M or nearly 10%.

Hotter economy data means interest rate higher for longer, which is a positive to NIM - a main source of bank earning. A hotter economy also means less bad loan write off, which is another positive factor.

With government printing so much money, inflation will last longer and central banks will hold off from cutting interest rate. Inflation reacceleration would be a disaster for FED and BOE to contain it. Crude has gone up in past a few month. If March inflation data continues to show higher than expected inflation, stock may turn south quickly and bank stock will eventually follow the macro market.

Since they are quite a few people mentioned the increased short position, which stands at 0.8% today.

I did a calculation based on the filing date close price and the percentage. The short position has a total cost £204.7M, paid £4M dividend and on paper loss £14.7M or ~7%.

Let's see how this plays out. The short either wins big if economy turns to south quickly and bank starts to lose money and forced to stop buybacks, or the short can dig a really deep hole by themselves. A paper loss above 10% would require risk management review and justification. An even deeper loss will certainly incur some people to lose their jobs.

I just checked my record on spreadsheet. When Barclay completed buyback on Oct 24, 2023, the remaining total floating shares were: 15,073,890,051 shares. Compared to Before last round buybacks, the share count reduced by 3.114%.

When this round of buyback starts, the total share counts started at 15,182,822,584 shares. There is a net increase of 108,932,533 shares. This equivalents to 1172 shares per employee in 1 quarter. Any body has an idea, why the bank is so generous to use shareholder money to fat their own wallet? In percentage, this 1 quarter stock dilution has cost 22% of last round buybacks. Since we only have two buybacks a year and employees have 4 Q of compensation, does this mean 44% buyback would drop to the black hole of stock based compensation?

Thanks for bringing the historic perspective. My calculation has assumed no revenue and RoTE growth. The investment bank environment may improve in this 3 year period. US stock index has been running at all time high. There is a high chance a correction/high volatility period in next 3 years, which will further bump up the investment earning just like covid-19 period. Let's see how Venkat turns around the bank.

In past a few days, Morgan Stanley increased their price target for BARC from 235p to 255p. Morgan Stanley has always been on the optimistic side. Bank of America increased the target price from 160p to 170p. BoFA claims Barclay still has a tough problem to solve.

RNS news shows BARC started buy back yesterday. If price stays around 165p, BARC can buy back 606M ordinary shares for this round. For 3 years, they can reduce 3.64B shares and assume they issue 600M for employee incentive plan, net reduction of share counts will be ~ 3B shares. This will reduce the share counts to ~ 12B, TBV will increase to ~420p. They will make 42p to 50p a share after 2026. Dividend will also increase above 6% when they keep the total dividend amount constant.

10B GPB return equals to 40% of today’s market cap, and annual is near 14%. With 10% RToE, the bank will make 33.1p and roughly return 20p to shareholders and retain rest 10p for general business. By 2026, if Venkat can achieve 12% as they targeted, each year they will make ~40p per year. NAV will grow by two factors: 1) retained profit from each year; 2) reduced share counts. At 165p buyback price ~50% NAV, 6.6B buyback can reduce 26.3%. If no major market crash, a P/NAV will adjust 50-60% at minimum, luckily we may exceed 70%, which is ~235p.

BCS is down 5.3% when I type.

CPI number has not helped. My guess is the watchdog probe into motor financing just reopens the painful memory for BARC investor. The firm carries a series of wrong doings and fine. So my understanding is BCS drop today is linked with the probe.

MS outgoing CEO commented that their MA target would most likely in overseas.

7 years ago, MS market cap was similar to today's Barclay market capitalization. Since then, it has grown ~ 5x. With its current size, it is not hard for MS to absorb Barclays if regulations allow.

If UK is not a place to nurture the growth, let somebody else do the job. It is unfortunate but selling the icon financial asset from city will make UK as a country poorer. It is the results of leftist government policies plus many populous voters asked for. It is unfortunate but possible outcome for UK financial assets: chopping into pieces and sell to foreign companies.

When I type, BCS is trading at NYSE at $7.64 up 2%. I checked exchange rate, almost flat. This translates into 150p for BARC. Unfortunately, barc stock can not be supported by its home market. It is traded at 147.5p and up only 0.7% here.

Here is the direct link:

https://www.reuters.com/world/uk/britains-labour-party-reviews-financial-services-unleash-city-growth-2023-12-08/#:~:text=Britain's%20Labour%20Party%20reviews%20financial%20services%20to%20'unleash'%20City%20for%20growth,-By%20Huw%20Jones&text=LONDON%2C%20Dec%208%20(Reuters),polls%20predict%20it%20will%20win.

I hope the link works. This is definitely towards the right direction. Windfall tax is very unlikely even under labour party.

https://www.tradingview.com/news/reuters.com,2023:newsml_L8N3D32TR:0-britain-s-labour-party-reviews-financial-services-to-unleash-city-for-growth/

2023 ytd

Regional -18%

Large cap financial 4.5%

BCS -8.5%

On yesterday's CNBC, Tom Lee predicted 2024 financial stock will grow 30%. I think large cap should lead. If BCS can match the performance, we should see BCS above $9. BTW, Tom Lee's prediction on 2023 has been almost exact right.

There are 3 articles from FT, Reuters and Bloomberg about Qatar sell of their stake. They listed worry about windfall tax as one reason for the sale. How likely will UK government introduce the tax?

This is most likely a waste of money. UK does not bear consistent growth in future. The investment return would not be great. I'm sure it does not pass the 2x test for buy backs. They should use the fund for stock buy backs instead of digging a deeper hole in a non-growth UK financial market.

Three news came out in past a few days.

1. https://finance.yahoo.com/m/d7679e15-4444-3f93-a68b-5af140b78ff8/can-barclays-move-beyond.html

2.https://finance.yahoo.com/m/19d45be6-77f2-3554-8fc1-a0473f329e6b/barclays-is-stuck-in-a.html

3.https://finance.yahoo.com/news/barclays-gets-5-billion-demand-101504561.html

First two articles are about Barclays problem and expectation from February earning announcement. The 3rd is Barc sold $1.75B AT1. I hope they use the fund for a massive buyback. FT listed the risk for Barc stock staying so low for too long. Either the bank has to bearkup or a deep pocket buyer may show up.

Current UK Barc and US BCS ADR have shown enough that UK equity market has a deep internal problem. Any noise becomes a large sell excuse and not recover. There is no institutional owners with long views to stabilize the market. The market is full of retail investors and some hedge funds. Current BCS is up 0.45% while I type and BARC closed at -1% already.

I read the same report and it makes economic sense to do a massive buybacks instead of increasing dividend now. Barclay's problem is market does not believe they can consistently make current profit. Otherwise, SP would not be so low. For every £1 they buyback at current price, they gain >100%. There are not business out there that can generate such return. So any more business expansion to use fund should pass this buyback test to justify it.

Assuming they can divest 15% tangible asset (like they are selling German business) and use the proceeds to buy back. They can amass £7B fund, added with ~£1.5B/year in existing buyback programs. The total buyback fund can reach £11.5B, which can eliminate > 50% shares at today's price, ie total share counts can reduce to ~ 7.5B. The number is very much similar to pre-2007 share counts. TNBA will increase to 620p per share. The stock price will track above change and move to 500p to 620p range. This does not change current dividend amount.