Barclays trading division's Q4 performance shines, but profit outlook dampens market confidence.

Before the US stock market opened on February 13, the British bank Barclays (BCS.US) announced its fourth quarter and full-year performance for 2024. The financial report showed that Barclays' total revenue in the fourth quarter was 6.96 billion, an increase of 24.3% year-on-year; net profit was 965 million, compared to a loss of 1.11 billion in the same period last year; and earnings per share were 6.70 pence, compared to a loss of 0.70 pence per share in the same period last year. Due to the volatility in various asset classes triggered by the election of US President Trump, the company's trading business achieved its best performance in at least ten years in the fourth quarter. Barclays' UK retail department also saw an increase in revenue in this quarter, rising by 46% to reach 2.62 billion. Stock trading revenue soared by 40% to 604 million (US$756 million), exceeding analysts' average expectations of 502 million. The company's fixed income trading net revenue was 934 million. Although this was below analysts' expectations, it still represented a 29% increase from the same period last year. Pre-tax profit increased to 1.7 billion, surpassing expectations. Although this helped Barclays PLC Sponsored ADR achieve a 10.5% annual tangible equity return, investors were disappointed when this better-than-expected performance did not an upward outlook. Barclays PLC Sponsored ADR maintained its profit forecast for next year, leading to the biggest drop in stock price in six months. The bank stated that despite the return rate exceeding the company's initial expectations, it plans to return at least 10 billion to shareholders between 2024 and 2026. Keefe, Bruyette & Woods analysts Ed Firth and Elise Yu Ge stated: "The performance itself looks satisfactory, but the outlook is disappointing. Especially the target for the 2026 fiscal year has not changed - we expect the return on capital to increase." Barclays' trading department is one of the institutions that benefited from Trump's election in November, which led to a sharp drop in US Treasury prices, while pushing up the US stock market, the US dollar, and Bitcoin. These actions suggest that investors believe Trump's second government will introduce a series of policies focused on tax cuts, deregulation, and tariffs, which will stimulate economic growth, corporate profits, and inflation. CEO CS Venkatakrishnan said: "As we reported, market volatility was high in the fourth quarter of last year, and this volatility has persisted into the first quarter." "Our stock business performed well in 2024 and our securitization business as well, our market share among clients has been growing." Regarding fixed income trading, Venkatakrishnan said Barclays saw a "slow start" in macro trading and European interest rates this year, but the company has begun to see momentum for these businesses to recover. "Barclays PLC Sponsored ADR is built on fixed income," he said. "I am very confident in the future performance of fixed income." Barclays expects the overall tangible asset return rate for the company to be 10.5% in 2024, around 11% in 2025, and surpass 12% in 2026. The company stated that the cost-income ratio for this year is around 61%, with projections expecting it to exceed 50%. Restructuring Progress The company's investment bankers also benefited from a series of transactions in the last three months of last year. Advisory and underwriting fees surged by 20% to 614 million, exceeding analysts' average forecast of 594 million. Jefferies Financial Group Inc. analysts Jonathan Pierce and Priya Rathod said: "Fourth-quarter profits were mainly due to revenue growth in key departments." "However, all key indicators for 2026 remain unchanged. Whether this is enough to drive the stock price up in the short term, given the recent strong performance, is currently unclear." A year ago, Venkatakrishnan announced a restructuring of Barclays PLC Sponsored ADR and unveiled a new strategy. Before taking these measures, the size of Barclays PLC Sponsored ADR's investment banking has always been a point of debate for investors as the investment banking consumes a large amount of capital compared to higher-return businesses in the bank's other operations. However, Venkatakrishnan did not plan to sell or reduce the department, but announced that Barclays will develop other departments like retail banking to reduce the investment banking sector's share in the company's overall business and increase returns. Additionally, on Thursday, the company set aside 90 million to cover potential costs related to regulatory investigations and related court cases regarding its car finance business, which involved commissions that helped car dealers earn thousands of pounds while allowing the bank to raise interest rates offered to buyers. This practice was banned in 2021. Commitment to Diversity Goals Venkatakrishnan stated that despite the bank lagging behind on various metrics, it remains committed to increasing diversity in its workforce. Barclays PLC Sponsored ADR has committed to increasing the global proportion of female managing directors and board members to 33% by the end of this year. The company also aims to increase the number of managing directors from underrepresented ethnic groups to at least 50% by that time. However, as of the end of last year, the proportion of women in these positions was still at 30%. According to the company's annual report, this means the company is slightly below the level required to achieve the 2025 target. Compared to the previous year, 2024...The number of CEOs from underrepresented ethnic groups has also slightly decreased.Barclays PLC Sponsored ADR continues to strive towards its goals, diverging from other competitors in the industry. After Trump took office, these competitors abandoned similar efforts. Barclays PLC Sponsored ADR is headquartered in London, but also holds significant positions on Wall Street. On the second day of Trump's inauguration, he signed a series of executive orders aimed at abolishing DEI programs within the U.S. government, federal contractors, and other organizations. One order directed all agency heads to find ways to end "illegal DEI discrimination and preferences" in the private sector. Professional services company Accenture Plc Class A, with nearly 800,000 employees worldwide, also abandoned diversity goals citing Trump's executive order. Goldman Sachs Group, Inc. is dropping an important commitment to not conduct IPO business with companies where the board is all white men. This rule was initially implemented in 2020, requiring boards to have at least one diverse member. In the UK, Barclays PLC Sponsored ADR is one of the founding signatories of the Treasury's "Women in Finance Charter," aiming to increase the number of women in the financial sector. However, their gender pay gap report shows that in 2024, women's average hourly pay is 29.7% lower than men's.