Barclays (LON:BARC) Plc has reported a decline in revenues at its investment bank, leading to a downward adjustment of the net interest margin outlook for its UK lender for two consecutive quarters. The corporate and investment bank's revenue was £3.08 billion ($3.8 billion), falling short of the £3.24 billion projected by analysts. This shortfall was primarily due to a 26% annual decline in fixed income, currency, and commodity trading activities.
In addition to the disappointing revenues, Barclays' pretax profit fell to $2.33 billion (£1.9 billion) from £2 billion last year, though it surpassed consensus estimates of £1.77 billion. No unscheduled return of excess capital was announced following a £750 million buyback in July.
The bank once again slashed its net interest margin expectation to between 3.05% and 3.1%, after a previous revision in July, as the benefits from high interest rates begin to diminish. In response to these challenges, Barclays is planning structural cost reductions that may lead to additional charges.
According to InvestingPro's real-time metrics, Barclays' market cap stands at 26636.76M USD. The bank's P/E ratio is 4.03, indicating it is trading at a low earnings multiple. The bank's revenue for LTM2023.Q2 was reported as 29842.65M USD. However, the revenue growth for the same period was a mere 0.42%, indicating that revenue growth has been slowing down recently.
CEO C.S. Venkatakrishnan confirmed their approach to improving shareholder returns through cost efficiencies and disciplined capital allocation, following advice from strategy advisers to address the lagging share price. As part of this strategy, Barclays is considering streamlining its portfolio with potential sales of its consumer-finance business in Germany and possibly its merchant-acquiring business.
Venkatakrishnan also confirmed that an investor update detailing capital allocation plans and revised targets will accompany full-year results. Additionally, Barclays is reportedly nearing a deal with AGL Credit Management for a private credit fund.
InvestingPro Tips suggests that Barclays, despite its challenges, is a prominent player in the Banks industry and has raised its dividend for 3 consecutive years. The bank is also trading at a low P/E ratio relative to near-term earnings growth. For more insights like these, you can check out InvestingPro, which offers a plethora of additional tips.
The bank will provide further updates on these plans at its full-year results announcement in February.
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