Barclays second-quarter profit beats estimates as investment banking revenues swell

• Pre-tax profit beat estimates at £2.5 billion ($3.34 billion) in the second quarter, compared with a mean LSEG forecast of £2.23 billion.

British bank Barclays on Tuesday beat profit expectations and announced a £1 billion ($1.33 billion) share buyback as market volatility boosted investment banking revenues.

Pre-tax profit beat estimates at £2.5 billion ($3.34 billion) in the second quarter, compared with a mean LSEG forecast of £2.23 billion. Group revenues met analyst projections of £7.2 billion.

Other highlights:

• Return on Tangible Equity hit 13.2% in the first half, versus 14% in the first quarter.
• CET1 capital ratio, a measure of bank solvency, was 14%, compared with 13.9% in the March quarter.

Investors have been watching the performance of the lender's sharpened investment banking unit, which posted income of £3.3 billion in the three months to June, up 10% year-on-year. The division is the traditional backbone of Barclays' revenues and a target of cost reductions under CEO C.S. Venkatakrishnan unveiled in February 2024. It saw further changes in recent months, amid the hire of former Deutsche Numis exec Alex Ham as global chairman, a report of plans to cut more than 200 jobs and a report the bank is tapping consultancy McKinsey to identify further room for cost cutting.

Adding to challenges, pending changes in U.S. capital leverage rules could unleash further competition stateside — where Barclays has had a significant presence since acquiring Lehman Brothers' investment banking and capital markets businesses — in the British lender's area of strength of debt markets.

Domestically, Barclays faces a shifting British banking landscape, where Spanish titan Santander has doubled down on its U.K. presence with the early-July acquisition of British high street lender TSB from Sabadell, and investors are watching for any change in strategic tack from NatWest, which returned to private ownership at the end of May.