Barclays says UK set for best year since 1948 as profits surge
The chief executive of Barclays' (BARC.L) has said the UK economy is on track for its best year since the aftermath of the Second World War.
"We estimate the UK economy will grow at its fastest rate since 1948," Jes Staley told the BBC on Friday. "That's pretty spectacular."
The comments came as Barclays reported a surge in first quarter profits that beat analysts' forecasts.
The bank made a pre-tax profit of £2.4bn ($3.3bn) on revenues of £5.9bn in the first quarter of 2021. Analysts had expected Barclays to report a pre-tax profit of £1.75bn on revenue of £5.15bn.
Booming business at Barclays' investment bank helped the lender offset weakness within its consumer business in the first three months of the year. Banking fees and equity trading income rose strongly as the investment bank enjoyed the benefits of a recent IPO boom.
Strength in investment banking offset challenges at Barclays dominant consumer business, where lockdown led to lower spending on its cards.
"Since the early days of the pandemic last year, our diversified business has demonstrated the resilience critical to ensuring Barclays’ financial integrity," Staley said in a statement.
Staley flagged "significant new growth opportunities" negotiated in the first quarter, including a deal to issue Gap's (GPS) new credit card in the US and a point-of-sale finance partnership with Amazon (AMZN), which will be expanded to the UK later this year.
Barclays was the last of Britain's four major banks to report on first quarter performance. All three of the others — Lloyds (LLOY.L), HSBC (HSBA.L), and NatWest (NWG.L) — had beat forecasts thanks to a buoyant mortgage market in the UK and a sunnier economic outlook.
Bumper mortgage growth helped Barclays grow its net assets by £3.6bn in the period — its biggest single quarter in history.
Rivals have been buoyed by the release of cash from loss provisions built up during the early stages of the COVID-19 pandemic. The unwinding has been prompted by a better economic outlook as the UK begins to exit lockdown.
Barclays didn't reverse any provisions but set aside much less than expected. The bank added £55m to its credit provisions in the quarter, compared to an expected credit impairment of just over £500m.
"As we enter the next phase of this pandemic, we remain resolute in our commitment to support the economic recovery," Staley said. "From our spend data, which captures UK economic activity across our cards and acquiring businesses, we are already seeing encouraging early signs of recovery in some sectors, including those hit hardest by the crisis.
"While evidence of recovery is encouraging, we have continued to take a cautious view of the impact of the pandemic on the business."
Barclays recently completed a £700m share buyback. Staley said the bank would "give further guidance on distributions when appropriate."
