Barclays ‘running free' as CEO Staley lauds surge in trading
LONDON: Barclays Plc chief Jes Staley’s efforts to fend off an activist investor and pursue his own strategy were bolstered by stronger-than-expected earnings at its investment bank, the centerpiece of his strategy.
Second-quarter trading revenue at the London-based bank grew 11%, according to a statement yesterday, more than the average 9.5% pace achieved by US banks in the quarter.
“That would be one of the best performances of an investment bank, whether it be Europe or the US,” Staley said in an interview with Bloomberg TV. “This is Barclays running free.”
Staley increased spending and hiked risk-taking in a bid to turn around the struggling investment bank. Yet revenue at the lender had sputtered since he took the helm in 2015, adding to pressure from regulatory probes and activist investor Edward Bramson, who reportedly wants to alter the bank’s plans.
The CEO said in the interview that he’s met with Bramson once, and other executives have had “a number of conversations” with the investor. “We still haven’t got which strategy he may be suggesting.” The bank’s shareholders are “quite supportive” of Staley’s own plan for Barclays, he added.
The shares slipped 0.5% at 8:18 am in London, erasing an early gain of as much as 3%.
Barclays said it remains on track to get its return on equity above 10% in 2020, and repeated its intention to pay a 6.5 pence dividend for 2018.
“I don’t know about running free but the results were quite solid compared to expectations,” said Joseph Dickerson, an analyst in London with Jefferies Group LLC who has a buy rating on Barclays shares. “The company is executing. However, there is still some way to go to get full-year returns on tangible equity up to over 10%.”
Trading also beat the 3% estimate by analysts surveyed by Bloomberg. Second-quarter net operating income was £5.29bil, above the £4.77-bil average estimate from analysts provided by the company.
Revenue from trading equities surged 32% to 601 mil pounds, the highest since Staley became CEO in 2015, and more than double both the average gain reported by five US banks and what analysts had predicted. The result was driven by derivatives, complex products that derive their value from underlying shares, and equity financing, Barclays said.
The UK bank has hired a string of ex-Credit Suisse Group AG executives since last year to boost performance at the equities business, including global head Stephen Dainton. — Bloomberg