Goldman Sachs trims Barclays target price, keeps at 'conviction buy'

The group lowered its target for return-on-equity to 11% from over 12%, but mostly due to factors other than the bank´s underlying earnings trends, the broker explained.

Among those were the higher allocated equity base, higher taxation as announced in the Summer Budget and £1bn of incremental structural reform costs.

Nonetheless, new guidance on the run-rate for non-core costs after 2016 was raised to £100m above company-compiled consensus, analyst Martin Leitgeb said.

For the first time ever, when the group published its third-quarter results it said it expected to incur approximately £1bn in costs over the 2015-18 period linked to structural reforms (US IHC, CCAR, UK ring-fenced bank).

The lender missed forecasts for underlying pre-tax profit on that occasion by 10%, mainly a a result of greater operating losses in 'non-core'.

Goldman Sachs trimmed its earnings per share estimates for 2015-2018 by between 0-4% as a result of the higher costs now expected.

Leitgeb kept his recommendation on the stock at 'conviction buy' while at the same cutting its target price, calculated on the basis of the bank's 12-month return on tangible equity, to 335p from 345p.