Barclays recently announced a fourth-quarter net loss of £111 million, much to the surprise of analysts who had expected a net profit of £60.95 million. The British lender is entering a phase of extensive strategic overhaul in an attempt to reverse declining profits. In addition to the fourth-quarter loss, the full-year net attributable profit also decreased to £4.27 billion from £5.023 billion in 2022, falling short of the consensus forecast of £4.59 billion.

Share Buyback and Three-Year Plan

Despite the challenging financial results, Barclays unveiled an additional share buyback of £1 billion and outlined a new three-year plan aimed at enhancing operational and financial performance. The CEO, C.S. Venkatakrishnan, emphasized the importance of these initiatives in driving future growth and profitability for the bank.

Barclays took a £900 million hit in the fourth quarter from structural cost-cutting measures, with anticipated gross cost savings of around £500 million for the year. The bank expects a payback period of less than two years for these cost-saving initiatives, which will significantly impact its overall financial performance.

The fourth-quarter group revenue stood at £5.6 billion, reflecting a 3% decrease from the previous year. Credit impairment charges also increased to £552 million, compared to £498 million in the fourth quarter of 2022. The common equity tier one (CET1) capital ratio declined to 13.8%, down from 14% in the previous quarter. Additionally, the full-year return on tangible equity (RoTE) reached 10.6%, excluding fourth-quarter restructuring costs.

Barclays’ traditionally strong corporate and investment bank experienced a slowdown in momentum in 2023, particularly in its fixed income, currency, and commodities trading division due to market volatility moderation. In response, the bank announced a significant operational overhaul, including substantial cost cuts, asset sales, and a reorganization of its business divisions. The new structure will comprise five operating divisions, focusing on different aspects of the business to drive growth and profitability.

Barclays sets ambitious targets for the coming years, aiming to achieve total gross cost savings of £2 billion and an RoTE of greater than 12% by 2026. The bank also plans to return £10 billion to shareholders between 2024 and 2026 through dividends and share buybacks, demonstrating its commitment to creating long-term value for investors.

Overall, Barclays’ recent financial performance and strategic announcements highlight the challenges and opportunities facing the bank as it navigates through a period of transformation and restructuring to drive future growth and profitability.

Earnings

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