Global deal making frenzy lifts Barclays profits to record high

Barlcays has ridden the wave of a booming global deal making frenzy to post its strongest ever third quarter results.

The UK banking behemoth registered a pre-tax profit of £6.9bn in the year to the end of September, its best take ever.

The standout performance was driven by Barclays’ investment banking division posting its best income take in the last seven years, climbing to £2.7bn on an uptick in revenues from dealmaking advisory services.

Barclays is the only UK banking giant that still has an investment bank on its books. 

Profits were up £2.4bn on the same quarter last year on a year to date basis. The record profit clip smashed analysts’ expectations of £1.6bn.

James Staley, chief executive, said: “On top of a good first half, a strong third quarter performance means Barclays has delivered its highest Q3 YTD pre-tax profit on record in 2021, demonstrating the benefits of our diversified business model.”

Rampant demand among businesses to capitalise on investors deploying dry power in search of higher yields has boosted banks’ bottom lines. 

Wall Street giants Goldman Sachs and JPMorgan registered upbeat third quarter results last week, driven by strong performances in their M&A divisions.

Barclays’ UK banking rivals report next week and are unlikely to register the same level of third quarter performance as they do not have a strong presence in the investment banking sector.

HSBC, Lloyds and NatWest all report their third quarter earnings next week.

Barclays released £622m in the year to September in reserves set aside to deal with the expected wave of defaults caused by the pandemic. Over the same period last year, it kept over £4bn in reserve, impacting its bottom line.

Its common equity tier one ratio, a measure of a bank’s strength, was 15.4 per cent. Profits for the third quarter alone were £2bn.