Market News & Analysis
Barclays Full Year Results Preview
Fiona Cincotta February 11, 2020 10:39 PM
- Thursday 13th February
- Pre-tax profit +5.2% £6 billion vs £5.7 billion (same period last year)
Barclays ids the first of the UK big 5 banks to report full year figures. With the PPI deadline firmly in the rear view mirror, Barclays will be hoping to unveil a lift to annual profits when it reports on Thursday.
The deadline for PPI claims was last August and coincided with Barclays share price falling to its lowest level since the financial crisis. In addition to a surge of late PPI claims, shareholders also grappled with Brexit uncertainty and criticism from activist investor Edward Bramson.
Barclays last updated in October when it announced a further £1.1 billion to cover PPI claims and as it warned on the outlook for 2020.
Since then the playing field has changed, but some headwinds remain. These results will be key to shed light on the direction that the bank is traveling in.
1. Conservative election victory
Any signs of the Boris bounce in the numbers will be closely watched. Traders and analysts alike will want to see if the Conservative’s outright election victory is benefiting the banking sector in anyway. The share price of Barclays along with its peers, rallied around 12% in the days following the December vote. However, these gains were rapidly pared following a more dovish BoE and continued concerns over Brexit.
2. Brexit trade deal
Whilst the UK has now left the EU there is still lingering uncertainty over whether the UK and the EU will agree a trade deal before the end of the transition period or not. Lingering Brexit uncertainty dragged on the UK economy last year, pushing the BoE to adopt a more dovish stance. Further uncertainty could continue to drag on the UK economy increasing uncertainty surrounding the interest rate environment; a headwind discussed back in October.
3. Edward Bramson
The performance of the Corporate and Investment Bank (CIB) will be closely eyed after Barclays came under pressure last year from activist investor Edward Bramson to reduce the size of its investment bank. Bramson has extended the duration of the stake that his vehicle holds in Barclays through a complex loan deal, from December 2019 to July 2022. This raises the prospect of a fresh campaign from the US based activist.
Over the last three weeks Jefferies and UBS have reiterated their “buy” rating on Barclays, both upping their target price to 252p and 195p respectively. From Monday’s close those target prices imply upside to the tune of 43% and 10.7%.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.