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Barclays share price: 4 things we learnt from its half-year results

The UK lender once again delivered an impressive set of results against a backdrop of challenging market conditions, prompting the bank to deepen cost cutting measure to boost returns.

Barclays Source: Bloomberg

Barclays delivered a strong set of half-year results last week considering the challenging market conditions that UK lenders against the backdrop of Brexit.

IG looks at the main takeaways from its most recent trading update.

Barclays records double-digit profit growth

The UK lender recorded an 82% rise in pre-tax profits to £3.1 billion in its half-year results, an impressive feat considering the challenging banking environment as a result of Brexit.

‘This was another resilient quarter of performance,’ Barclays Group CEO Jes Staley said.

‘For the second quarter in succession Barclays generated an attributable profit of over £1 billion and delivered EPS of 12.6p for the first half of 2019,’ he added.

Cost-cutting deepens to boost returns

In the face of tough market conditions and a highly competitive UK mortgage market, Barclays pledged to double-down on its cost-cutting measures to boost returns and hit profitability targets in 2019.

Staley admitted on a call to reporters that the bank had cut some 3,000 jobs during its second quarter, with the bank firing what individuals that it described as ‘non-revenue producers’.

The lender also plans to deepen its cost-cutting by reducing bonuses and lowering its overall capital expenditure, helping bring its spending below £13.6 billion instead of its previous guidance for costs in the range of £13.6 billion to £13.9 billion.

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Barclays share price finds support

Despite recording another strong quarterly performance, Barclays share price continues to slide, with it falling 22% over the last 12 months.

However, on a year-to-date basis, Barclays stock is down just 2%, which is a testament to its resilient performance and is more reflective of what is and continues to be an extremely trying environment for British lenders.

‘Margin pressure in the UK mortgage market has dented income at home, while the corporate and investment bank has done better than a relatively pessimistic market had expected,’ Hargraves Lansdown analyst Nicholas Hyett said.

‘The UK retail market looks like it's becoming more and more competitive, particularly mortgages, and a squeeze on margins at the same time as the economic outlook is weakening is a potentially unpleasant combination,’ he added.

Barclays continues to deliver returns for shareholders

The lender remains committed to returning value to shareholders, with the bank increasing its interim dividend by 20% to 3p.

Increasing its dividend pay-out is not only a reflection of its stronger-than-expected results, but also the absence of regulatory fines that the bank has been burdened with in previous years.

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