Barclays raises income outlook after third-quarter profit beats estimates

Barclays reported an 18% rise in third-quarter pretax profit to £2.23bn and raised its 2024 income guidance, a result that exceeded the £1.96bn expected by analysts polled by Visible Alpha. The bank said it now expects net interest income, excluding the investment bank and head office, to be more than £11bn, compared with its previous guidance of £11bn.

The figures give investors a clearer view of how Barclays is progressing against the medium-term targets it has set for returns and shareholder distributions. Higher pretax profit improves the bank’s capacity to absorb costs, meet regulatory requirements and fund capital returns, though the company’s own guidance remains subject to trading conditions and regulatory outcomes.

Income guidance lifted

Barclays said the upgraded income target applies to net interest income outside the investment bank and head office. Net interest income is the spread a lender earns between interest received on loans and securities and interest paid on deposits and other funding. For a large bank, that measure is affected by interest rates, deposit pricing, loan demand and the mix of assets on the balance sheet.

The bank did not, in the reported figures, change its broader 2026 objectives. Barclays said it remains on track to reach a return on tangible equity of more than 12% by 2026. Return on tangible equity measures profit relative to shareholders’ tangible capital and is widely used by bank investors to compare profitability after excluding goodwill and other intangible assets.

Capital return plan unchanged

Barclays also said it remains on course to deliver at least £10bn of capital returns between 2024 and 2026. Capital returns can include dividends and share buybacks, depending on board approval, earnings performance and regulatory capital requirements. The bank’s statement, as reported, did not provide a new breakdown between those two channels.

The lender further said the effect of regulatory changes on risk-weighted assets is expected to be at the low end of its previously stated 5% to 10% range. Risk-weighted assets are a regulatory measure that adjusts loans, securities and other exposures for their perceived risk. A lower increase in risk-weighted assets can reduce the amount of additional capital a bank needs to support the same balance sheet.

The results mark a stronger-than-expected quarter for Barclays on the pretax profit line and a modest improvement in management’s income expectations for 2024. The company’s reaffirmed 2026 targets indicate that, based on its latest statement, it has not altered its medium-term return and capital distribution ambitions.

This story draws on original reporting from MarketWatch.