Barclays' share price climbed more than 2.3 per cent this morning having beaten expectations for second quarter profits, with net income rising to £1.85bn – ahead of the £1.8bn expected - as chairman John McFarlane set out his three point plan to strengthen the bank.
Total income rose to £6.55bn in the three months to the end of June up from £6.4bn in the previous quarter, while adjusted pre-tax profits stood at £1.85bn. Operating expenses were down slightly to just below £3.9bn for the quarter.
For the first half, adjusted pre-tax profits were up 11 per cent to £3.7bn, which Barclays said reflected “improvements in all core operating businesses”. Additional provisions of £800m have been made for ongoing investigations and litigations, taking the total put aside for the forex scandal to £2.05bn.
On top of that, a further £850m has been put aside to deal with claims over missold PPI. Total operating expenses for the half dropped three per cent to £7.74bn “reflecting savings from strategic cost programmes, principally in the investment bank”.
Why it's interesting
It's been just over a fortnight since John “Mac the Knife” McFarlane ousted Antony Jenkins, followed a week later by the surprise exit of Sir Mike Rake.
While the bank is showing signs of progress, it's clear that McFarlane is impatient to get Barclays back in a stronger position as soon as possible. The ex-Aviva boss has taken on the reins as executive chairman and so will be able to steer the business as he sees fit.
However there are still concerns around parts of the business – it was the most visited by UK watchdogs last year, for example - and with no chief executive expected to join until the end of the year at least it will be interesting to watch how performance continues in coming quarters.
What Barclays said
McFarlane has made it clear he will ramp up the turnaround plan, saying although he was pleased with the progress so far there was “a lot we can do to accelerate our progress”.
“Barclays today has a good portfolio of businesses,” he said. “However, we need to accelerate the execution of the strategy. There is more that can be done to deliver better returns for shareholders, faster, and that work has begun under three group priorities which I have established since becoming executive chairman earlier this month.”
These are “to deliver on our strategy, with increased focus on our core franchise”; to “accelerate the delivery of shareholder value” and “instill a high performance ethic and process across the Group, underpinned by an enhanced values driven culture”.
McFarlane is setting out his plans for a stronger Barclays, having already achieved above-expectations profits.