Barclays raises interest guidance despite fall in first-half income

Barclays reported a return on tangible equity (RoTE) of 11.1% for its first half on Thursday, down from 13.2% in the same period last year, with profit before tax slipping to £4.2b from £4.6bn, although it raised its full-year net interest income guidance.

The FTSE 100 bank said the decline in RoTE included the impact of inorganic activities, with the figure rising to 12% when those were excluded.

Group income fell 2% year-on-year to £13.3bn, while net interest income (NII) excluding the investment bank and head office came in at £5.4bn, with Barclays UK contributing £3.1bn.

Operating expenses increased 1% to £8.2bn, reflecting the estimated £120m impact of the Bank of England levy in the first quarter.

Despite that, cost efficiency savings of £0.4bn helped maintain operating costs at £8bn.

Credit impairment charges remained stable at £0.9bn, with a loan loss rate of 45 basis points, slightly up from 44 basis points in the first half of 2023.

The Common Equity Tier 1 (CET1) ratio stood at 13.6% as of June, down from 13.8% in December, while tangible net asset value (TNAV) per share rose to 340p from 331p over the same period.

Barclays completed a £1bn share buyback during the period, and announced an additional buyback of up to £750m alongside a half-year dividend of 2.9p per share.

Looking ahead, Barclays raised its 2024 guidance for group net interest income excluding the investment bank and head office from £10.7bn to £11bn, driven by higher-than-expected interest rates and improving deposit dynamics.

The bank’s cost-income ratio target for 2024 remained at around 63%, with further cost efficiency savings expected.

“We are making good progress on our three-year plan, with a RoTE of 11.1% in the first half of 2024, which puts us on track for our target of greater than 10% RoTE in 2024,” said group chief executive officer CS Venkatakrishnan.

“We completed the sale of the performing Italian mortgage book, announced the sale of the German consumer finance business, and are on track to complete the acquisition of Tesco Bank in November.

“We announced a half year dividend of 2.9p per share alongside a share buyback of up to £750m, with total capital distributions to shareholders of £1.2bn in respect of the first half of 2024.”

At 0820 BST, shares in Barclays were up 1.35% at 236.95p.

Reporting by Josh White for Sharecast.com.