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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FINANCIALS
Barclays (BARC LN) reports 4Q23 on Tues 20-Feb. NatWest is a good lateral but global IB earnings and US asset quality could override. Strategic review needs to shrink the IB to reduce credit discount to peers, in our view.
- The big levers of UK revenue slowdown, credit quality and global investment bank (IB) production will be focus areas. News from NatWest today was solid on the former two but indications on the latter are more mixed. FICC consensus is -7% q/q which would be one of the better Euro performances but in line with global figures. Equities and primary consensus is for flat revenues, marginally below industry indications so far. US consumer asset quality could also be weaker.
- Strategy in focus (again): payments and private banking. The results of the CEO’s strategic review are set to be outlined. The problem is clear; the IB produces sub-par returns and consumes huge amounts of capital, driving share price underperformance. So far, we know Barclays is looking to sell its merchant payments business (cash generative but low growth) and reported to be looking at buying SocGen’s UK private bank (mirroring Morgan Stanley’s wealth pivot). Improving credit performance requires further derisking (and shrinking of the IB), in our view.
- Barclays’ equity has underperformed Eurobank peers by nearly 20pp over the last year, its CDS continues to trade much wider than Euro Fin Sr IG index and even wider than the corresponding US index (see graphic). Fixing the IB problem would be an effective way to close that gap, in our view.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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