FINANCIALS: Barclays Results Positive: Perhaps Not Enough To Tighten Further

Barclays (BACR: Baa1/BBB+/A) results are relatively good and guidance not being raised appears a little conservative to us. However, spreads had tightened into results and there’s perhaps not enough here to push that further, much as these figures are supportive, in our view.

• Credit stats: loan losses are better than consensus (by 28%) and have dipped to 38bp, driven by big drop in the US consumer business; mgmt are clear this is below “through cycle” expectations (of 50-60bp) but that the key US business will likely continue to improve. NPLs are stable q/q (at c.100bp). CET1 ratio cum (20bp) equity buyback is 13.4%, some 30bp below ex-buyback expectations.
• Revenues were broadly in line with consensus; UK & US consumer, along with FICC in the IB all missed but the rest of the IB, along with large parts of BUK offset. Costs were broadly in line and the (28%) loan loss beat meant pre-tax is 14% ahead.
• Targets are reaffirmed, rather than any upgrade, which, with that loan loss improvement in the US, appears a touch conservative. Spreads had done well into these results which, along with the new buyback, means these are likely not good enough numbers to push that further.

Conf call is 0900 (London time) at: https://www.netroadshow.com/events/login?show=79f8c38c&confId=67477