Barclays shares were trading up 1.8% at 193.5p in early trade on Wednesday after profits jumped on strong investment banking activity and impairment reversals.
Barclays has reported revenue at £21.9b with a 1% increase from last year (£21.7b), as a result of Barclay’s diversified income stream.
The Group delivered a record annual profit before tax of £8.4b which is 174% higher than 2020 results (£3.06b). The CET1 ratio remains unchanged at 15.1% whilst the bank’s RoTE was 13.4%.
With the economy recovering, UK and US consumers exhibited positive trends in consumer spending. UK mortgage lending and deposits increased.
An improved macroeconomic outlook are set to have a positive impact on unsecured lending balances in the coming quarters and Barclays said they see impairment charges returning to below pre-covid levels. Barclays operating profit was helped higher by the net reversal of £653m provisions made during the pandemic.
Barclay’s Corporate and Investment Banking division was gain a strong performer seeing Net Profit for 2021 increase to £5.8bn.
“Barclays is the sixth largest global investment bank – a fact sometimes overlooked thanks to its position as a UK high street staple. This position means Barclays is far, far less reliant on traditional interest income, and instead generates most of its income from fees, commission and trading,” said Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown.
“In the short term that means rising interest rates have less of an immediate benefit than for the likes of Lloyds, which has more traditional income streams. However, looking to the long-term and the expansion of public and private markets, this diversified business model is an area of interest.”
Having being forced to scrap dividend payout during the pandemic, Barclays has began to gradually increase shareholder payouts and is set to pay 6.0p in the 2021 full year, a sharp increase from the 1p paid in 2020.
With results like these, it is safe to say that C. S. Venkatakrishnan, Group Chief Executive, is pleased.
“Barclays demonstrated a clear and sustainable path to growth over the course of 2021, delivering double-digit RoTE across our operating businesses, and returning £2.5 billion of excess capital. Our strategic priorities will continue to develop the diversified business model that we have established, investing in advanced technology capabilities in our consumer businesses, delivering sustainable growth across our global Corporate and Investment Bank, and reinforcing our commitment to aiding the transition to a low-carbon economy,” stated C. S. Venkatakrishnan.
Going forward, the bank, plans to adapt and benefit from the changes coming in the financial services sector. Barclays plans to do so by improving customer service with advances in digital services.
Barclays foresees global growth in private and public capital markets, to which they believe they will be able to reap the benefits of by continuing to diversify their income streams and carry on innovating. Barlcays also plans on taking opportunities during the low-carbon trend, by helping the business and their consumers transition to a more sustainable position.
