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Barclays PLC on Thursday set out plans for growth, and a further share buyback, as it delivered better-than-expected annual results led by its Investment Banking division.
It wasn’t enough to drive the stock price higher, however. Shares in the London-based lender were 5.0% lower at 292.28 pence each in London on Thursday morning.
‘Overall a solid set of results, but little new to get excited about either. This, plus the strong run up in the share price over the past year, may temper any initial reaction,’ explained analysts at Citi.
Shares in the bank have more than doubled in the last 12 months.
Pretax profit in 2024 totalled £8.11 billion, rising 24% from £6.56 billion in 2023. Total income rose 5.6% to £26.79 billion from £25.38 billion. Pretax profit beat company-compiled consensus of £8.07 billion, while total income was ahead of a £26.53 billion forecast.
The Barclays Investment Bank was a standout division, achieving total income of £11.81 billion, a 7.0% rise on-year, beating consensus of £11.67 billion. Barclays UK division revenue rose 9.1% to £8.27 billion last year. The unit includes its ring-fenced UK retail banking division.
Operating costs rose 3% to £16.19 billion from £16.71 billion, although the overall cost-income ratio dropped to 62% from 67%. Impairment charges rose to £1.98 billion from £1.88 billion.
The CET1 capital ratio eased to 13.6% from 13.8%. The net interest margin rose to 3.29% from 3.13%.
‘In 2024 we met our financial targets, delivering for our customers and clients, with operational and financial performance improvement driven by disciplined execution of the three-year plan. This delivered a group [return on tangible equity] of 10.5% for the year and £3.0 billion of capital distributions, including the £1.0 billion buyback announced today,’ Chief Executive CS Venkatakrishnan said.
Loans and advances to customers increased by £4.9 billion to £207.7 billion, primarily driven by an around £8 billion increase from the acquisition of Tesco Bank and growth in unsecured lending and mortgage lending.
Customer deposits increased by £3.1 billion to £244.2 billion, driven by a £7 billion increase from the acquisition of Tesco Bank, partially offset by a reduction in Business Banking and retail current account balances. The loan deposit ratio remained stable at 92%.
In the fourth quarter, pretax profit ballooned to £1.66 billion from £110 million. Total income increased to £6.96 billion from £5.60 billion, while operating costs fell 10% to £4.24 billion from £4.74 billion.
Looking ahead, Barclays expects a return on tangible equity of around 11% in 2025, rising from 10.5% in 2024.
Group net interest income, excluding the investment bank and head office, of £12.2 billion is expected, rising from £11.2 billion in 2024. Its aim for 2024 was ‘greater than £11.0 billion’. This was, however, lower than the £12.3 billion consensus, cited by RBC Capital Markets.
For 2025, it targets Barclays UK net interest income of around £7.4 billion, rising from £6.5 billion in 2024.
The lender is also targeting a group cost-income ratio of around 61%, including total gross efficiency savings of £0.5 billion in 2025.
It plans to return at least £10 billion of capital to shareholders between 2024 and 2026, through dividends and share buybacks, with a continued preference for buybacks.
For 2026, it eyes a return on tangible equity of greater than 12% and total income of more than £30 billion.
The target range for the CET1 ratio is 13% to 14%, and it sees the cost-income ratio in the high 50s percentage. Cost target includes total gross efficiency savings of around £2 billion by 2026.
Barclays said its total dividend for 2024 was lifted 5.0% to 8.4 pence per share from 8.0p.
The lender also intends to start a new £1 billion share buyback. In 2024, total share buybacks were £1.8 billion.
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