On Thursday, Barclays, the British banking giant, announced an increase in its full-year pre-tax profit, which slightly surpassed what analysts had expected. Alongside this positive financial news, the bank also unveiled a £1 billion share buyback program.
The bank’s pre-tax profit saw a 24% rise, reaching £8.108 billion in 2024, which edged over the analysts’ estimate of £8.081 billion according to LSEG data.
Barclays has been busy revamping its strategies over the past year, aiming to slash costs by £2 billion by 2026, boost shareholder returns, and stabilize financial outcomes. This strategic pivot is honing in on lucrative consumer and lending operations, and as part of this refinement, the bank has absorbed the retail banking arm of Tesco, the British grocery chain.
Interestingly, Barclays’ robust banking division might find itself in a favorable position to capture more of the market domestically. This comes in the wake of HSBC’s announcement last month about its plans to step back from its M&A and equity capital markets ventures in Europe, the UK, and the US, as part of a broader restructuring of its investment banking activities.
Recently, Barclays managed to bounce back from a significant three-day tech outage that hampered payments and transactions at the end of the previous month, with those issues now resolved.
Broadly speaking, UK banks, including Barclays, are grappling with a sluggish economy and a dip in IPO activities on the London Stock Exchange. The Bank of England made its first rate cut of the year last week and hinted at more reductions in 2025 due to a downgraded economic forecast for the UK. Such monetary easing generally bites into bank profits by narrowing the gap between what banks earn on loans and what they pay out on deposits. Meanwhile, British and European banks are finding it challenging to keep up with their American counterparts, who might gain further competitive advantage if the newly inaugurated U.S. President Donald Trump opts for lenient local regulations.
At the same time, UK Finance Minister Rachel Reeves is urging the Financial Conduct Authority to balance enhancing competitiveness with consumer protection. The financial world is keeping a close watch on the upcoming Financial Services Growth and Competitiveness Strategy set to be revealed in the spring.
Stay tuned for ongoing updates on this developing story.
