Barclays achieved the profit rate, due to some trading revenues and decrease of bad-loan losses. However, the investors aren`t completely satisfied and continue pressing. So, now, Barclays is making serious efforts to win the investors for the current business model.
The bank management announced the recent figures very proudly, as this was the first time during a significant period when the bank got significant profits after years that looked like a complete financial imparment. Now, the bank management, including the Chief Executive Jes Staley are struggling to show the facts: lender`s business, in all its aspects, can bring significant, and, what is even more important, strong returns. They are requesting investors not to intrude in the banks strategies and just let the management improve the situation. The results can be already seen now. They are asking investors to let them run the bank and bring the investors those returns that they expect to have.
The bank returns climbed up to 11.8% during the last three months, which is already higher than the expected 10% by 2020. The first half profit is 468 mln USD, which is a significant increase from 1.2 bln UDS of losses during the same period previous year.
On the contrary to expected, the banks shares dropped by 0.5% during the London trading session. Profits didn’t cause interests but rather worries, that the profits were the results of one-off gains and will not last long. These higher-than-expected revenues aren`t trusted much. The Barclays management informs, that the capital buffer of the bank really fell, but not significantly. They explain this decrease with a need to take more risks than they usually do.
Investors are worried about the capital decrease, as well, because most of them believe, that the capital resources could be invested somewhere in a more profitable thing.
For now, the trading revenue was down for 2%, but it was compensated by equities trading revenues, which increased for 30%. About the 2%, Barclays insist, that the market volatility was very low in July, that’s why, the results couldn’t be too high.
The executives of the bank insist, that they are managing the bank as well as it is possible in the current situation. After years of struggling and pressure, the situation is really fine. However, insiders tell, that the traders didn’t buy the growth vision of the bank`s executives and didn’t trust in it completely.
For now, the Chief Executive of Barclays tells, that they started implementing the changes, but haven’t changed the entire system yet. He tells as well, that, doesn’t matter the pressure from the side of investors, it is impossible to change just some slices of the business. If they want results, the entire business model should be change, without regrets. Especially is they all consider, that the old business model stopped working years ago, and the bank hasn’t brought any profit since then.
But the fate of the bank isn’t completely in the hands of its management or investors. The Brexit could impact the entire country economy in a significantly negative way, so, the bank might roll down into losses again.