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Shareholders in Barclays will be hoping that its shares can emulate those of UK peer Lloyds yesterday with a rebound and recovery. From being offside by as much as 3%, they managed to close higher by almost 1%. However, with less than an hour gone, it’s not looking great for BARC as the shares trade fresh intra-day lows.
Barclays may have reported Q3 profits +40%, helped by lower litigation and provisions, but it has nonetheless disappointed. Total income and net operating income were not quite as high as consensus had hoped, with bond, FX and commodity trading down 34% amid muted volatility. This was even weaker than EU/US peers have announced. Operating costs were also a little too high while the Core T1 capital adequacy ratio showed no improvement.
However, the real clanger, and likely reason for the share price drop, is pre-tax profits of ‘just’ £1.1bn. This was well below consensus expectations of £1.4bn, helping send the shares back sharply from yesterday’s bullish flirt with 198p and the ceiling of a falling channel in place since February. Bears will be looking for another leg lower to the channel floor and November 2016 lows at 175p. Bulls may have to be content with any foray back towards the channel ceiling, needing something special for a breakout.
Mike van Dulken, Head of Research 26 Oct 2017
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