Barclays: More good news to come in 2010

Market watchers believe today's stellar numbers from Barclays are a sign of things to come.

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by Deborah Hyde on Feb 16, 2010 at 15:19

Barclays’ chief executive John Varley said today that the banking group has strengthened its financial position considerably and is well positioned to manage further changes that may be required by regulators.

Finance director Chris Lucas said 2010 has started well with group profit before tax ‘well ahead’ of 2009 and impairment levels to decline albeit only moderately.

Market watchers also believe 2009's strong performance will be matched by good news in 2010.

Robert Law at Nomura:

The principal feature is the improved balance sheet position and the CEO’s comments that it is within the group’s power to be capital generative.

The read-across to other UK banks is also positive, in our view, particularly the lower impairment costs; however, we believe Barclays is likely to be better positioned on impairments, notably with lower commercial real estate (CRE) exposure.

Furthermore, the figures show lower revenues in the global retail and commercial banking (GRCB) businesses, which is also likely to be replicated at other UK banks and to which Barclays is less exposed, given the importance of BarCap. Barclays therefore looks likely to be the best positioned of the domestic UK groups.

Impairments are guided to be ‘moderately’ lower than 2009, which implies a significantly lower number than the £8.8bn we currently assume. However, the company does caution on the regulatory uncertainties, although the implication is that it expects to make progress towards this.

Michael Helsby, analyst at Merrill Lynch:

At the time of the third quarter interim management statement Barclays guided towards bad debts at the low end of a £9.0-£9.6bn range.

Reported bad debt was £8.1 billion versus our forecast of £9.2bn and consensus of £8.8bn, this trend suggests upgrades for 2010 consensus.

Overall at first glance the results look better than expected and we would expect upside pressure on consensus forecasts. Barclays trades on 0.8 times 2009 tangible net asset value for a business that can deliver around a 15% return on net asset value.

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4 comments so far. Why not have your say?

I dumped Barclay's as my personal and business bankers when the sharply raised costs and started to give currency spreads reaching 3%.

As a Barclays Wealth customer I found that the so called service became shoddy almost as though they were deliberately holding up payments, It was not easy to get my money out.

If they are screwing their other customers the way they did me then the next results might be different. On one transfer they tried charging me £300+ for intermediary bank charges, I got it back by pointing out that I had specified to pay my cost only, the other bank charged £12 to recieve the funds.

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My son worked for high street bank and said that personal banking for wealthy customers was regarded as a bit of a joke, they used exactly the same banking infrastructure as everyone else but just had a named person to talk to. (Just like a lot of business accounts). The bank regarded it as highly profitable and the customer as a load of mugs who didn't mind paying over the odds just to have a fancy chequebook with "private banking" or "Coutts" (RBS) written on the front. Although it said that you needed a high net worth for one of these accounts you might be surprised how many people have got them on fairly moderate incomes.

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Thank you for confirming what I suspected about Barclays Wealth. My so called Manager seemed to be a bit of a twit, but I only hadsix figure amounts on my account, he kept trying to sell me investments at ridiculous management fees, the literature was aimed at the novice level of investor, it felt as though they were thinking that if they could cast the net wide enough they would pull in some rich dummies. £40 to transfer money with Barclays £23 with HSBC £25 with BS.

Quarterly charges jumped from £35 to £45 where with the others most are free.

I banked with Barclays for 25 years, I started with a feww pounds and was treated like a Lord now I have a lot more and get treated like SH1t.

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Lynn McConnell

Apr 13, 2010 at 17:38

FYX142

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