Barclays posted its highest quarterly profit in at least 12 year as it reappeared the benefits of higher interest rates, and a strong performance by its credit card division.
FTSE 100 lender announced that its pre-tax profit for the three months ending March was up 16 per cent on a year-on year basis, to £2.6 billion. This beat analyst expectations of £2.2billion. It claimed that this was the best quarterly result it had achieved since at least first quarter 2011, when comparisons were difficult due to accounting changes.
Lenders across the board are benefiting from the recent rise in borrowing rates, which has allowed them to increase their margins. Commercial lenders only passed on a portion of the Bank of England’s base rate hikes to savers, but their borrowers have borne the full burden of increased rates.
The banks’ net interest margins (the difference between rates charged on loans and deposits) have increased dramatically.
Barclays reported that its margin was up to 3,18%, from 2,62% a year ago. Net interest income increased by over a fifth, to £1.6 billion.
The performance of its Consumer, Cards and Payments division was also boosted by the strong performance there, where revenues increased by 47 percent to £1.3 billion. The bank benefited from a rise in US card balances. This was partly due to the acquisition of Gap’s credit card portfolio by the bank in a completed deal last year.
Barclays, one of Britain’s largest high-street lenders, also operates one of Europe’s few investment banks that can compete with Wall Street giants.
Venkat is the chief executive of Coimbatore Sundararajan Venkatakrishnan. Venkat recently stepped down from his role in order to receive cancer treatment.
He stated that Barclays enjoyed a successful first quarter. He said that the momentum within Barclays allowed them to maintain a strong capital position, provide attractive returns to investors and support their customers and clients in an uncertain economic climate.
Nigel Higgins and other Barclays directors are under scrutiny for the way they handled Venkat’s predecessor Jes Staley. Staley quit abruptly the bank in October of 2021 in order to contest findings from a regulatory probe into his past links with the paedophile and financier Jeffrey Epstein. Epstein died in prison in 2019 Staley met Epstein when he was at JPMorgan before he joined Barclays.
In recent lawsuits filed against JP Morgan, allegations were made about Staley’s relationship with Epstein. This included the claim that Staley “personally observed” sexual abuse committed by the offender. Staley’s lawyer has called the accusations “slanderous” as well as “baseless”.
Higgins, along with the rest of board members, initially supported Staley in 2019, when the first investigation by City regulators was revealed. When Staley quit, the board also expressed its “disappointed” at this result.
Higgins informed shareholders last month in the notice of the annual general meeting of the bank that the recent allegations regarding Staley’s links with Epstein are “serious” and “new”. Next Wednesday the AGM will take place, and the board may be asked about their handling of this situation.
Barclays shares rose by 4p or 2.6% to 157 3/4p today.