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Highlights
- Strong RoTE Performance: Barclays achieved a 12.3% return on tangible equity in Q3 2024, with full-year RoTE targets on track for 10%.
- Upgraded NII Guidance: Barclays UK net interest income forecast for 2024 has increased from £6.3bn to £6.5bn.
- Cost-Efficiency Measures: The group is on target to deliver £1bn in cost savings by the end of 2024, improving its cost ratio.
Barclays PLC (LSE:BARC) has released its third-quarter results for 2024, demonstrating robust financial performance with a return on tangible equity (RoTE) of 12.3% for the quarter and 11.5% year-to-date. The bank remains on course to meet its targets for 2024 and 2026, driven by strong net interest income (NII) growth and continued cost-efficiency measures.
Performance Highlights for Q3 2024
- RoTE: Barclays delivered a solid return on tangible equity, achieving 12.3% for Q3 and 11.5% year-to-date, reinforcing the bank’s ability to meet its medium-term goals. The 2024 RoTE target remains at greater than 10%.
- Net Interest Income (NII): The group’s guidance for 2024 NII excluding Investment Bank (IB) and Head Office has been revised upwards to greater than £11.0 billion, with Barclays UK NII increasing from £6.3 billion to approximately £6.5 billion.
- Cost Efficiency: Barclays recorded a cost
ratio of 61% for Q3 2024, which is in line with its year-to-date figure. The group is on track to meet its 2024 target of approximately 63%, achieving £0.7 billion in gross cost savings year-to-date and expected to deliver around £1 billion by year-end.
Prudent Risk Management and Strong Capital Position
Barclays continues to demonstrate prudent risk management, with a loan loss rate (LLR) of 37 basis points (bps) in Q3 2024, lower than the expected range of 50-60bps. This figure includes the impact of the recent acquisition of Tesco Bank, with full-year LLR expected to remain at the lower end of the target range.
The bank maintains a robust balance sheet, reporting a Common Equity Tier 1 (CET1) ratio of 13.8%, comfortably within its target range of 13-14%. This ensures that Barclays remains well-capitalized and prepared to absorb any future market shocks.
Group Financial Targets for 2024 and Beyond
For 2024, Barclays remains focused on delivering returns, targeting a RoTE of over 10%, excluding inorganic activities, with income expected to surpass £11 billion from its UK operations. The bank also plans to achieve a group cost
ratio of approximately 63%, supported by its ongoing cost-efficiency initiatives, which are projected to generate around £1 billion in gross savings by the end of 2024.
The bank also expects to maintain its loan loss rate between 50-60bps through the cycle and will continue operating within its CET1 ratio target range of 13-14%.
Long-Term Outlook for 2026
Looking further ahead, Barclays has set ambitious targets for 2026, including:
- RoTE of over 12%: The bank is aiming for an even stronger return on equity in the medium term, supported by improved profitability and cost control.
- Capital Returns: Barclays plans to return at least £10 billion in capital to shareholders between 2024 and 2026 through dividends and share buybacks, with a preference for the latter. Dividends will continue to be paid semi-annually, with growth driven by share count reductions.
- Income and Cost Targets: By 2026, Barclays expects total group income to reach approximately £30 billion, with total operating expenses targeted at around £17 billion. This will result in a cost ratio in the high 50s, further supported by £2 billion in additional cost savings by 2026.
