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Https://www.stck.pro/video/BCS/66297285

Https://moneyweek.com/why-uk-equity-market-is-shrinking

I read a few articles recently, which detailed the disturbing trend of UK equity market from different angle. Labour government police introduced in 90's has a long lasting effect. Private pension and insurance fund have reduced their UK equity holding from more than 50% down to 4%. There is no active institutional equity buyers on the UK equity market. In contrast to US equity market, which is a vibrant fortune making machine, UK equity market is a value destruction machine. I always consider Britain is the smartest country in world which laid foundation and contributed to capitalism and many other natural science/technologies. It is sad to see they run into such sorry state on the core of capitalism - equity market.

So BCS's easiest path to fix the valuation issue is to split the BUK and US operation and list the US operations in NYSE or Nasdaq. Another way is to do dual listing for BARC group on both UK and US. This allows US retirement fund and index fund to invest into Barclays.

I went to Morgan Stanley website which has a new research note and it reiterated 230p price target and overweight. But its comment in the key summary about capital deficit is quite eye-catching. Everyone here knows how painful the capital deficit in 2009-2012 period was. Below is the key summary:

BUK NIM was poor and there is uncertainty around restructuring plans; however, a 4.2x P/E 2024E implies a capital deficit which we don't see. We stay Overweight.

Below is the section about restructuring:

We believe restructuring costs will have a limited impact on payout. Barclays has a CET1 of 14.0% vs. its target of 13.5% (middle of the range). Considering 4Q23 tends to see RWAs down in the quarter, we see ample room for Barclays to take the "material" restructuring charge in Q4, and still pay the £750mn share buybacks we forecast. We factor-in c. £500mn restructuring costs in 4Q23 which lowers the reported ROTE in 2023 to 9.2%. We forecast 4Q23 CET1 at 13.9%.

We still see c. 10% ROTE feasible 2024-2026E each year. Our EPS is down 2% in 2024E, but remains broadly unchanged in 2025E (Small up) as cost cutting initiatives come through. We acknowledge the BUK NIM is a disappointment and the uncertainty around restructuring plans, however on 0.4x TNAV for a c. 10% ROTE or 4.2x P/E 2024E, the stock is discounting a capital deficit problem which we believe is not the case on a 14% CET1. Our base case estimates imply a 13.7% total yield in 2024E, and up to 16% if disposals are completed (SeeBarclays Bank: Improved outlook for revenues and payout: up to Overweight (26 Sep 2023)). We stay Overweight.

£1.5B price tag is really a shock to me. Anybody on the board can verify this number?

Less than 50min agon, Bank of America downgraded Barclay stock from neutral to under perform. The reason is a £1.5B restructuring expense, which will put Q4 earning into -4.6p. 2023 EPS will drop from 28.2p to ~23.6p.

If Barclay is going to layoff 10% staff, this means the cost for each affected employee costs Barclay ~£171,000. I doubt the bank employee has such high compensation in an year. But this is a value Bank of America put out. I hear CFO said the amount is higher than £200M-300M (which is annual restructure cost usually running at).

BoFA also lowered price target from 180p to 150p. Below is the part commenting the restructuring:

Near-medium term pain, uncertain future benefit

Our revised forecasts factor in one interpretation of management’s comments – a

£1.5bn restructuring charge, reducing annual costs by £1bn by 2026E. After near-term

margin pressure, this reduces our 2023E-2025E EPS, but increases 2026E by 13%

(Exhibit 11). RoTE is at or below 10% 2023E-25E, rising to 11% in 2026E, CET1 is in the

bottom half of the 13-14% target range 2024E-25E (Exhibit 7) and there’s an all-in yield

of 9% 2024E-25E, rising to 13% in 2026E (Exhibit 6). Clearly there are more complex

potential outcomes, but we’d expect actions to improve medium-term profitability

modestly at some cost to near-term earnings and distributions.

I don't know why the chat web cut off my remaining comments. Now I have to re-type again.

Assuming 3% cost saving (Barclay's target is below 60% from Q3 63%), it can generate ~ £200M per quarter cost savings. A year would be ~ £800M. Adding this amount to the existing buyback fund, the total buyback can reach ~ £2B a year. This is ~ 10% shares in today's price. By doing so for 3 year, EPS and TNAV will increase 30% with current dividend plan and business expansion plan. It would be surprise if EPS increase from current 32p/sh to ~42p/sh and stock price does not respond.

I have not seen other stock which punishes the cost cutting by zooming into the re-structuring cost, not mentioning benefit.

A simple math is 3% cost saving (63% in Q3 to

Just added another tranche of BCS (BARC ADR) but I got up late and missed the $6.32 low. I have a sizable holding already.

US stock like meta announced cost cutting and stock jump. Barclays announces cost cutting stock tanking 10%. It is counter intuitive. With PE ratio in 3, dividend > 6%. Holding Barc is better than treasury bonds, higher yield and potential to grow.

It is a beat. Estimate £1.77B. Actual £1.9B. US estimate is $0.33/sh or 6.7p, actual is 8.3p (23.9% above estimate). Barclays has proven again and again its profitability. Bank of America analyst still considers it is not time for re-rating. It is ridiculous. US credit card grew 9%, which offsets majority of weakness in UK and other investment bank.

Now, let's wait for the conference call and hope the stupid analysts not use another excuse to sell the stock. Fingers are crossed.

Anybody has the link of 7AM Q3 earning release?

3. Mixed track-record on costs. In BUK in particular, we believe there is room to cut costs but we have not included any significant cost cutting plan and keep c. 60% C/I throughout our forecasts vs.

One month on from our upgrade, we review the main pushbacks, and why we remain confident Barclays will outperform in the next 6-12 months. We see upside to our CIB numbers, while consensus looks too low on CC&P and capital return for a stock trading on 5x PE and 12-14% yield.

1. CIB is a low multiple business and recovery in IB pipeline is fragile. Visibility in its markets business is low by nature, however trends so far are ahead, and our numbers are also assuming Barclays gives back some market share wins in 2024E. If this is not the case, our US colleagues' average 1% FICC growth forecast in 2024E would imply a 6% upgrade. Additionally, our +20% banking fee growth in 2024E still has fees 50% below peak in ECM (20/30% below in M&A/DCM).

2. If UK margin misses, it will drag the stock down anyway. We do see UK banks margins challenged, and worse deposit mix may well drive structural hedges lower again (see our UK banks preview). We are below consensus on BUK NII for this reason, however UK NII makes up c. 23% of group revenues and we see this more than compensated by higher revenues in both CC&P and CIB. For context we are 2% ahead on Barclays group PTP 2024E, vs. 5-10% below in Lloyds and Natwest.

3. Mixed track-record on costs. In BUK in particular, we believe there is room to cut costs but we have not included any significant cost cutting plan and keep c. 60% C/I throughout our forecasts vs.

I think both of you are too negative to the US market. The Friday intraday reversal is a powerful signal that end of year market will be pretty good and strong. There are a lot of money on sideline waiting for opportunities to enter US market. I'm not sure about UK market though. The US September job number is not as strong as surface. September full time job actually had a loss. The gain is from part time jobs, which exactly shows that FED policy has introduced stress to economy. They can wait and see, not to threat to increase interest further. The treasury yield increase is equivalent to another rate hike already (which is the main source for current correction). In most cases, FED rate hike is done.

VIX 18 is a medium value looking back from 1990 to today. You can not expect above 30/40 very often. You should buy when hitting 70/80 with both hands. There are money flowing into market regardless what happens. The 401k money is flowing into the market with every pay check. US company buybacks are still high and strong. These are the macro force driving US market up in a long term

Talking back to financial stock, the market is very selective. BAC went up 1c on Friday. News surfaces that they have $110B paper loss on the long term treasury bond, similar to Silicon valley bank situation, but BAC liquidity is not a problem. Worry is recapitalization and dilution to existing shareholders. Barclay 70% coming from US investment bank and credit card. It does not have the problem. Credit card loss is not a problem now with the job report.

50 DMA to cross 200DMA is the observing point. It is delayed a couple of months and looks like to happen around Q3 earning announcement. Barclays will discuss the strategic review from BCG by then.

Below is excerpt of Morgan Stanley research note. All positive upgrades coming from US card and investment bank. MS projected buyback increases to 1.5B GPB and may hit 2.0B GPB. US credit card profit has pretty large room to grow.

US cards - a matter of scale. We benchmark Barclays' US credit card business with our US Consumer Finance analysts, Betsy Graseck and Jeff Adelson, using local subsidiary accounts. Our conclusion is the company is quietly gaining more scale in this business, which should improve the profitability gap vs. peers (6% ROTE 2023E vs. an average >20% for local specialists). Together with its push in wealth, our upgraded 2024/25E revenue estimates are >8% ahead of consensus in CC&P.

Stabilizing rates improve M&A pipeline. Peak rates sentiment has improved the deal pipeline, and Dealogic data shows activity is starting to come through, in particular in ECM. On the back of this, we raise our revenue estimates 3-4% in CIB and now expect revenue growth in 2024/25E. This compares to our more cautious view on UK margins, where we are below consensus. We see downside risk to margins across the UK, including BUK/Natwest/Lloyds/VM.

Capital efficiency to increase payout. We estimate the hung leverage finance deals added £10-15bn of RWAs in the IB in 2022 and are largely still on balance sheet. A gradual unwind of these deals, together with announced/potential disposals, could pre-fund expected Basel 4 impacts and allow increased payouts, on our calculations. We raise our share buybacks to £1.5bn per year (12% total yield) from £1bn before, and see upside to £2bn per year if the deals are completed (14.5% per year).

Upgrading to Overweight. We acknowledge both the IB and US cards are low-multiple businesses, but, on 0.5x TBV for a 10% ROTE 23/24e, we believe earnings upgrades will drive the stock. Its discount to UK peers is also explained by the lower yield, which we expect to be addressed as RWA growth surprises positively.

Barclays Seen With Improved Revenue, Returns Outlook -- Market Talk

Mentioned: BCS

0900 GMT - Barclays' outlook for revenue and payout is improving and this is likely to drive the stock, Morgan Stanley says in a note. "We think consensus underestimates the revenues in [consumer, cards, and payments, or CC&P], which, together with an improved outlook in the [investment banking], leaves us ahead of consensus for the first time," analysts write. There is room for capital efficiency to increase payouts, they add, noting they don't expect the British bank to outline an extensive cost-cutting plan at its fourth-quarter strategic update. The broker raises its rating to overweight from equalweight and its target price to 230 pence from 190 pence. Shares climb to the top of the FTSE 100 in morning trade, up 3% to 158.3 pence.(elena.vardon@wsj.com)

Correction: it is actually 160M shares. 20M RSU and 140M options. Worse than the number I posted.

This is too much. They only bought back 210M shares till today. Now Barclays issues 140M shares and options for employee incentives. The net buybacks is only 70M shares, a tiny drop of shares. This is equivalent to steal money from shareholders.

~~~

7 Sep 2023 09:00

RNS Number : 6365L

Barclays PLC

07 September 2023

07 September 2023

Barclays PLC - Block Listing

Barclays PLC (the 'Company') announces that an application has been made to the Financial Conduct Authority and the London Stock Exchange for the block listing of 160,000,000 ordinary shares of 25 pence each in the capital of the Company (the 'Shares') to trade on the London Stock Exchange and to be admitted to the Official List.

The Shares will be issued and allotted under the Barclays Group Share Incentive Plan (20,000,000 Shares) and the Barclays Group SAYE Share Option Scheme (140,000,000 Shares).

When issued, the Shares will rank equally with the existing issued Shares of the Company.

Admission is expected to be effective on 08 September 2023.

- Ends -

@TheReducer, I'm sorry for your paper loss. And I share your frustration on BARC's painful 15 year down trend. My investment history is shorter than yours. My 1st tranche of BARC purchase was more than 8 years ago. I traded in and out a little without much to show off, which is a high opportunity cost since I live in the US and there are many other good stocks to buy. My current holding through 3 of my investment accounts is almost break even now. The tranche I bought after 2020 crash offered some help.

Barclays stock is hovering around 6% 2023 full year dividend yield (per company's 8.6p full year estimate) or 6.7% of 2024 full year and 7.1% 2025 dividend yield.

I read Bank of America, Morgan Stanley and other analyst reports on Barclay stock. The brokerage houses are negative or at best neutral to Barclays. The near term risk is high loan loss from upcoming recession. The investment bank occupies a large portion of risk asset (~70%). The return on investment bank is very volatile and current return (~10%) from investment bank can not make up the capital cost (14%). To be honest, I don't believe their argument and the data. My points are:

(1) Yes, investment earning is volatile. But it did extremely well during pandemic. BUK was losing money but investment bank provided bump return to maintain Barclays profitable. Why cann't the investment do the same again during the upcoming recession? It is not fair and not accurate to only look at the down side of investment bank or retail bank.

(2) Even with only 10% ROIC, overall earning is still quite healthy. The bank does not really pay 14% to the investment capital cost. Their senior bond notes are somewhere 5-7% at most. On top of that, the low cost deposit provides another cost reduction to overall cost. 14% is more like a theoretic calculation to assume all investment bank capital is borrowing currently from market at a hefty premium rate.

Barclays is the only left EU banks to compete in the investment business with US banks. I don't know and do not want to speculate if there are hidden agenda underneath. As long as the management can maintain current dividend and buyback rate, I'm happy about it. Warren Buffet said stock market is a mechanism of transferring wealthy from impatient investors to patient investors. With the help of dividends, I'm willing to stay in the patient camp for Barclays stock.