Barclays Results Underwhelm But Big Capital Payout For Equity Holders; Muted For Credit

Barclays (BARC LN) 4Q23 results are underwhelming on operations but the new strategy includes a much larger capital return commitment which should please equity holders but doesn’t help the credit stack much. Key aim to shrink investment bank capital consumption (to 50% from current 63%) would be positive but we’ve heard similar from previous mgmt.

• Revenues were 3% lower y/y (and 2.4% below consensus), led by the UK and investment banks. Costs rose 1.6% but that excludes a major restructuring charge (which has been pre-indicated) – including this costs rose 26%, still around 2% worse than consensus. Credit losses rose 11% (5% better than expected) but the bank was still barely profitable pre-tax and loss-making after tax (market was only expecting around breakeven).
• In credit terms, credit losses rose to 66bp of loans (up 15bp q/q) and NPLs rose to 2.06% (up 10bp from Sep-23), so no meltdown indicated here. CET1 dropped 20bp (to 13.8%), broadly in line with expectations.
• Strategic review: lots of detail here but key highlights appear to be an RoTE of 10% in FY24 (which was the missed FY23 target) and 12% in FY26 (new); GBP10bn of capital return to end-26 (new). CET1 ratio in range of 13-14% is same as before. There’s a GBP30bn revenue target for 2026 (over 10% above current consensus) and, yet again, an aim to shrink capital consumption in the investment bank.

Conf call is 0830, available at https://event.webcasts.com/starthere.jsp?ei=1651263&tp_key=c67f2bfba5