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"They really wanted to disappoint you by coming in at 2.25 lol"
Yes ha. Made better by the inclusion of the additional £500m buyback. These are a good set of results overall. As a shareholder I would have liked a better dividend but at least it's going in the right direction. So the final dividend is going to come out at 4.5p - and if the next 6 months go well I think we'd be looking at a further £1b buyback for year end.
I’ll be disappointed if this turns out to be the case. I was hoping for 3p. Barclays can easily afford to up the anti to 3p with a final dividend of 6p.
We missed out on a declared dividend. 2.3p will really disappoint and I’d expect a drop in the share price if this turns out to be the case.
Nice increase on the Lloyds dividend today.
##Did Barclays say when they were going to start the new share buyback program?##
I had the same question. They should really take advantage of the low share price like Lloyds are doing. Surprised they've not started the buyback yet.
I've no idea if we've seen the worst of this rout but I've topped up further today with purchases of 41,922 and 50,444 taking my total holding now to 606,264.
I'm £55,000 down overall but this has reduced my average further.
I might be looking at this wrong but it appears to me that we now have more shares in circulation than we did after completion of the last share buyback - which isn't good news. No doubt there will be a further share buyback announced next week but if we're going to end up with more shares in circulation again I think I'd rather have the dividend than a buyback. I'd be interested to read what others think?
I think I'm going to need to read up a bit more on uncrossing trades. From what I've read so far it's standard practice that occurs during auction periods. I will self educate on that as it's not looking like a one line answer :-)
16:35 on all three. And they all have UT next to them which confirms your statement of 'uncrossing trade'
I googled uncrossing trade and still not sure I understand what they are. All I can gather is it's some sort of settlement between brokers. Does that happen every day and I've just not noticed it before or just on days where there's large volumes traded?
Lloyds have followed Barclays by announcing a fantastic set of 3rd Quarter results. I really think that Bank shareholders who have been patient will be rewarded over the next few years.
Lloyds crossed the 50p threshold this morning for the first time in a long time. Barclays have also crossed the £2 threshold although it's a little disappointing to see them drop back. I think the problem here is that the results were good but the banks have been conservative in their announcements. Let's not forget that these aren't the end of year results, it's just a 3rd quarter trading update. We already know Barclays will be a 4p final dividend award and we knew this before the trading update. Lloyds had no plans to announce anything further. HSBC was a little more exciting in announcing a £2 Billion share buyback and we have Natwests results tomorrow - not expecting too much there other than another set of good results.
So we're now in a holding pattern for another 3 months - where I do expect positive momentum to the share prices of the banks before end of year results. Barclays have pretty much ruled out any special distributions, preferring to steadily increase their progressive dividend. I'm expecting Lloyds to announce an increased final dividend, a special distribution and further share buybacks and maybe something similar from HSBC and Natwest.
Other than that, I can't help but feel this was a boring 3rd quarter - despite the fantastic positive results. So more patience is required from long term shareholders and a great time for any potential new shareholders to jump on board because without any dramatic external crises coming along that no one can account for I see strong capital growth ahead for a change.
The UK Banks are currently sat on huge sums of capital that isn't making them a lot of money with the interest rates at the current level (0.1%) - which is the lowest in the Bank of England's history.
Inflation is rising, and there is pressure on the Bank of England to raise interest rates. Now currently the Bank of England is buying Bonds on the open market and this is known as quantitive easing. This is going to stop soon and UK Banks will be there to pick up the slack. Typically in any economy if inflation was running at 3-4% then you would expect interest rates to be fairly close to that. The BOE won't increase rates that high - it will be gradual. Likely to be moved to 0.25% in November and then to 0.5% in February 2022. If that happens then the banks can sink an awful lot of money safely into Government Bonds where it will immediately start earning them money which they aren't getting today. If inflation doesn't start to cool then interest rates could rise further still without causing any serious issues to the economy - as with inflation comes wage increases, then comes interest rate rises etc. It's only when interest rates get higher like 10% where it can have a serious negative effect on the wider economy and can then become a problem for banks due to large increases in defaults. (I am fully aware that there are people today with Mortgages where an increase to say 2% could be the difference between them keeping there home or losing it - this is true - but not in numbers large enough to destabilise the entire economy).
In the meantime, UK Banks will start to receive a lucrative income that isn't there currently. Barclays aren't as reliant on that type of income as Natwest or Lloyds because they have a strong investment bank. However, the retail side of Barclays that has also done well will definetly benefit so the headwinds are favouring UK Banks currently and long suffering shareholders are in for a good couple of years - and hopefully beyond.
A few points to note:
Jes Staley and Tushar Morzaria advised they weren't surprised by the initial drop on results day and it can be typical as professional investors take to profit taking. But todays drop shouldn't be a worry as the stock is still bearish and will continue to climb.
Buybacks - There have been two major buybacks this year. One of £700m at year end results for 2020 and recently the still 'ongoing' £500m buyback. These are being bought every day at market prices and there is a limit on the volume of shares traded per day that can be bought. So it's not as simple as saying we'll buy £500m @£1.70. They have to buy gradually each day and the price has recently crept up. But even @£2 per share they're being bought back cheap when compared to the net asset value for each share of £2.87. If the share price was above that then shareholders would be better served getting excess capital back as a dividend (noted some would just prefer that anyway but that's not my talking point)
The example quoted by the CEO was this, "Essentially right now if our stock is worth £1 we are buying back at 70 pence. So you are getting that 30 differential for free. That is why buying stock back is so attractive"
Whilst he was using those figures to explain the banks approach I actually think we're getting a far better deal on the two buybacks over the last year.
In terms of progress, the bank has had a target for a number of years of a 10% return on equity. The last few years they have fallen short of that target. We're on the 3rd quarter this year and the figure is already at 15%. So even if Q4 is really bad they will comfortably hit that target of 10%. The bank is well positioned now to hit a 10% return on equity year in year out.
Dividends - The bank has announced at the interim results that they will pay a dividend on a progressive basis. So that has already been confirmed as 6p for 2021. They will pay a slightly higher dividend in 2022 and slightly higher again in 2023. The aim is to have a dividend that grows with the growth of the bank every year and that it is very consistent. So if in 2021 the bank has made 35p per share and it has paid out 6p in dividends then there is a lot of room for a progressive dividend over the coming years. A consistent buyback program in support of this and a consistent return on equity of 10% then the stock will grow.
Back to a point in an earlier post, you only have to look at the experience of the major US Banks. They were all trading at this sort of level two years ago, but they kept generating levels of profitability that Barclays is now looking at. So I believe the markets will eventually, within a couple of years value Barclays above it's net asset value which is what we were used to pre-financial crisis.
I know it doesn't always work like that.
I guess I was making two points here. Barclays are still classed as cheap because they're trading below their book value - and Jes Staley said one of the reasons he's deploying buybacks is if shareholders are willing to sell shares back to him for less than they're worth he's happy to buy them.
My second point, is that American banks are trading at a higher price than their book value. As cyclical stocks British Banks tend to follow American Banks - it can just take a while.
The market decides on the share price. Net Asset Value is just one of many things to take into account when looking at where to invest. If Barclays was to get taken over, broken up and then sold off then after selling the assets it would be worth more than what the market is currently valuing the firm. They're trading at 0.6 of the value of the assets - so they are classed as cheap or 'Value' shares.
The stars seem to be aligning for financials. Barclays have today announced their best ever year to date results. Better than the golden times before the financial crisis. So for a number of reasons I agree with Brighty that £3.50 within 18-24 months is not beyond the realms of possibility.
Just an observation. Barclays Net Asset Value per share has increased to £2.87. So Barclays shares are still cheap by this measure. In contrast American Banks are trading above their book value. As an example Bank of America is trading at 1.58 to the value of each share.
So, when British banks catch up, and they usually do Barclays @£2.87 x1.58 (PB Value) would give Barclays a share price of £4.53.
So £3.50 within 18 months is achievable in my view.