Barclays Reports 23% Profit Increase Amid Dealmaking Revival and High Interest Rates.

Barclays' third-quarter profits surged 23% to £1.6bn, surpassing analyst expectations of £1.3bn. The UK bank benefited from high interest rates and a resurgence in dealmaking activities. Net interest income reached £1.7bn, slightly above forecasts, prompting Barclays to raise its full-year guidance to over £11bn. The bank's investment division saw a 6% increase in income, driven by equities trading and renewed dealmaking activity.

The results align with trends observed among Barclays' Wall Street counterparts, where the revival of mergers and acquisitions after a two-year lull and market volatility in August have boosted investment banking performance. CEO CS Venkatakrishnan expressed optimism about the continued rebound in M&A activity, though he noted that the upcoming US election could introduce volatility and affect dealmaking.

Barclays' investment banking co-heads recently outlined plans to enhance returns by focusing more on advisory work and equity capital markets. The bank saw a 58% year-on-year increase in investment banking fees and underwriting revenue, primarily driven by debt capital markets fees. The trading division also performed well, with revenues from equities and fixed income trading up 3% from the previous year.

In its UK retail banking segment, Barclays reduced its bad loan provisions to £82mn, down from £267mn in the same period last year, citing low delinquencies in UK cards and a high-quality mortgage lending portfolio. The bank is set to complete its acquisition of Tesco's bank in November, which is expected to bolster its capital position alongside the sales of its German and Italian retail loan books.

Report by Financial Times