Barclays, a British bank, reported a net profit of £1.6 billion ($2 billion) for the third quarter, surpassing expectations. The net profit was higher than the forecast of £1.17 billion and showed a 23% increase compared to the same period last year. Revenue for the quarter was £6.5 billion, slightly exceeding the predicted £6.39 billion.
Following the positive results, Barclays shares rose by 3.5% in London, reaching their highest level since October 2015. The bank’s return on tangible equity increased to 12.3% from 9.9% in the previous quarter, and its CET1 ratio rose to 13.8% from 13.6%.
Earlier this year, Barclays announced a strategic overhaul to enhance financial performance by focusing more on domestic lending and reducing costs in its investment banking unit. The bank also acquired U.K. retail banking business Tesco Bank as part of its strategy.
In the second quarter, Barclays saw a slight decline in net profit due to lower income in its U.K. consumer and corporate banks, while the investment bank reported a 10% increase in net profit.
However, in the third quarter, the domestic bank income rose by 4%, with Barclays raising its annual forecast for U.K. retail net interest income. Corporate bank income increased by 1%, driven by higher average deposit balances, and investment banking income saw a 6% gain.
On the other hand, income at Barclays’ private U.S. consumer bank decreased by 2%, and its wealth management unit fell by 3% year-on-year.
Barclays CEO C. S. Venkatakrishnan stated that the bank is on track to achieve the targets set earlier in the year. The bank now expects group net interest income to be above £11 billion for the full year.
Barclays shares have surged 55% year-to-date, following a dip in 2023. Several banks, including HSBC, have announced restructuring plans to streamline operations and cut costs amid potential challenges in net interest margins due to falling interest rates.
Barclays has implemented strategies to manage interest rate risks effectively, such as the structural hedge, which has contributed to the expansion of net interest income in recent quarters.
Deutsche Bank, which reported higher-than-expected net profit in the third quarter, also saw a significant increase in revenue at its investment bank and asset management divisions.