Barclays Reports Strong Q3 Profit

By Lawrence White and Sinead Cruise

LONDON (Reuters) – Barclays reported an 18% rise in third-quarter profit, outpacing forecasts, driven by slower-than-expected interest rate cuts and improved investment banking prospects. The British bank's pretax profit for July-September was 2.2 billion pounds ($2.85 billion), up from 1.9 billion the previous year and exceeding analysts' average forecast of 1.968 billion pounds.

The lender raised its income outlook, now expecting net interest income to exceed 11 billion pounds.

Barclays shares rose by 1.8%, outperforming a 0.5% increase in the FTSE 100. The earnings report comes as Europe's major banks show improved health since the 2008 financial crisis while being pressured to sustain earnings amid falling interest rates.

Barclays forecasts three rate cuts by the Bank of England to a final rate of 4.5%, down from a previous forecast of five cuts to 4%. The UK business reported robust returns with third-quarter returns on tangible equity rising to 23.4% from 21% a year ago.

The bank’s private banking and wealth management reported returns of 29%, down from 41.2% last year.

Investment Banking Performance

Barclays’ investment bank income rose 6% year on year, surpassing expectations but lagging behind U.S. and European rivals like Goldman Sachs and Deutsche Bank, which reported heavier gains. Fixed income and equities revenue both increased by 3% year on year.

Advisory fees surged by 133% to 186 million pounds, with debt capital markets fees rising by 48% to 344 million pounds. Equity fundraising income rose by 3% to 64 million pounds but was nearly half of the second quarter’s income.

The bank restructured its sector coverage and enhanced staff investments in key areas, including Energy Transition, Industrials, Healthcare, and Technology.

In February, Barclays announced its biggest revamp since 2016 to enhance investor confidence, aiming to expand domestic lending while reducing the investment bank's financial footprint. The reorganization involved splitting the business into five divisions for improved transparency regarding performance.