Barclays has been hit with a £50 million fine from the UK’s financial watchdog (Tim Goode/PA)
(Picture: PA Wire)RISING interest rates pushed Barclays to £2 billion profit for the last three months, about £200 million better than City forecasts.
While that will please long-suffering investors, it could catch the eye of new PM Rishi Sunak, looking to fill a £40 billion hole in the public finances.
Banks argue that a windfall tax would only restrict what they could lend to companies and small customers. Critics say the extra profits are only due to rising rates and that the banks should pay.
The bank has set aside £381 million to deal with expected bad debts, but says so far it is not seeing high levels of customer distress.
CEO CS Venkatakrishnan said: “We are ready to provide support for customers and clients facing an uncertain economic environment and higher cost pressures. Whether helping retail customers to manage their finances or corporate clients navigate markets volatility, we will continue to be focused on meeting their needs.”
Santander and Standard Chartered also had strong returns today.
Neil Wilson at markets.com said: “Barclays beat expectations thanks to surging revenues at its trading business. FICC (fixed income, currencies and commodities) trading operations revenues rose 93% but there was still nearly £1bn hit from a trading error in the US. Shares not seeing much uplift from this – usual concerns about trading revenues being one-off perhaps but also investors are not confident of seeing any returns. Whilst the report card is good there is a good deal of economic uncertainty and worries about a windfall tax on banks.”
Barclays was just fined £50 million by the Financial Conduct Authority for “reckless conduct” in a 2008 fundraising deal Qatar. It did not properly tell the market about the nature of the deal, which kept the bank out of UK state hands at a time when rivals needed bailouts to survive.
John Moore at RBC Brewin Dolphin said: “Looking ahead, the uncertain economic backdrop will likely put a brake on some of Barclays markets, particularly at its credit cards and investment banking divisions, with the outlook for corporate action — such as capital raises — more difficult.”
Barclays shares fell 2p to 148p. They are down 25% this year.
