(Bloomberg) -- Barclays Plc said it will repurchase as much as £750 million ($963 million) of shares as Chief Executive Officer C.S. Venkatakrishnan makes good on his promise to improve the bank’s payouts to investors.
The buybacks come after Barclays reported better-than-expected income in the second quarter, aided by a surge in revenue from some of its Wall Street operations.
Barclays said it now expects net interest income for the year to be around £11 billion, up from an earlier forecast of £10.7 billion. The new forecast, which excludes investment banking and head office results, comes as the Bank of England has held off on cutting rates in recent months, buoying banks’ results.
Under Venkatakrishnan, Barclays is forging ahead with the three-year turnaround plan it unveiled earlier this year. As part of that, Venkatakrishnan has vowed to increase the bank’s return on tangible equity to above 12% by 2026 as he bids to shed £2 billion of costs and boost shareholder returns.
“We are in the process of delivering on the investor plan that we laid out in February of this year, which was to have a simpler, better, more balanced bank,” Venkatakrishnan said in an interview with Bloomberg Television from the company’s trading floor in London.
Venkatakrishnan said the bank achieved about £200 million of cost savings in the second quarter and remains on track to notch up about £1 billion of cost cuts this year.
Barclays’ shares rose as much as 3.4% in London before declining 1% at 12:55 p.m. The stock has soared 52% so far this year, outpacing the 23% advance of the FTSE All-Share Banks Index.
As part of his revamp of the bank, Venkatakrishnan is seeking to reduce the relative size of its flagship investment bank because it consumes more capital than other, higher-returning parts of Barclays business. At the same time, he’s been investing in boosting Barclays’ businesses in the UK as well as its corporate bank and wealth and asset management divisions.
What Bloomberg Intelligence Says
Revenue, costs and impairments all topped expectations, showing the lender’s turnaround remains on track. A £750 million share buyback for 2H and a 24% jump in equities trading revenue — even as fixed income slipped 3% — add credibility to consensus-busting 2026 targets.
Philip Richards, BI senior analyst
Barclays’ stock traders joined their rivals across the industry in reporting better-than-expected revenue. Income from equities trading surged 24% to £696 million in the three months ending in June, topping the £640 million average of analyst estimates compiled by Bloomberg.
Debt capital markets revenue jumped 54% to £420 million in the second quarter while equity underwriting revenue surged 75% to £121 million. Advisory was up by 6%.
That all helped offset a bigger-than-expected drop in fixed income trading revenue. The bank blamed “lower client activity in macro” and said it was facing tough comparisons to a year ago, when it had a £100 million gain tied to inflation-linked products.
“Credit spreads have been muted and credit volatility has been muted, quite the opposite case from equities,” Venkatakrishnan said. “Our FICC performance is improved from the first quarter to the second and I expect to continue to see more of that improvement as the year goes on.”
Other highlights from the quarter’s earnings:
- At the UK retail bank, revenue fell 4% amid pressure on mortgage margins;
- Increased card balances within the US consumer unit boosted the division’s income 7%;
- Loan loss provisions for the group came in at £384 million, beating estimates.
--With assistance from Harry Wilson, Donal Griffin, Jonathan Ferro and Lisa Abramowicz.
(Updates with CEO comments in fifth, last paragraphs.)
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